Topic: Corporate

Congress enacted the Alaska Native Claims Settlement Act, 43 U.S.C. §§ 1601-1629a, (ANCSA) to settle the land claims of Alaska Natives and Native groups. 43 U.S.C. § 1601(a). ANCSA authorizes the Secretary of the Interior to convey certain public lands to Native groups that are incorporated under Alaska law but that do not qualify as Native villages. 43 U.S.C. § 1613(h)(2). We consider whether the Secretary’s regulations regarding the qualification of Native groups, 43 C.F.R. §§ 2653.6(a)(4), (a)(5), are consistent with the statutory definition, 43 U.S.C. § 1602(d).

Facts

In 1976 the Grouse Creek Corporation applied as a Native group for a conveyance of 6720 acres of National Forest land.[1] Under the applicable regulations, a group qualifies as a Native group only if a majority of the residents of the locality are members. The Bureau of Indian Affairs found that the Grouse Creek group did not qualify: Only eleven of thirty-one residents were members of the Grouse Creek group. The Grouse Creek group appealed, and the administrative law judge redrew the boundaries of the locality. Nonetheless, he found that the Grouse Creek group fell just short of meeting the majority requirement even within the new boundaries: Fifteen of thirty residents were members. Because less than a majority of the residents of the locality were members of the Grouse Creek group, it did not qualify as a Native group.

Critical to this determination was the Secretary’s decision to count one family of five, the Munsons, as residents of the locality but not as members of the Grouse Creek group. The Munsons are Alaska Natives enrolled in the Native Village of Eklutna. Nonetheless, they have lived in the Grouse Creek locality at all relevant times.[2]

The Grouse Creek Corporation appealed the ALJ’s decision to the Interior Board of Land Appeals, which affirmed. Because the IBLA concluded that, even within the more favorable boundaries, less than a majority of residents were members of the Grouse Creek group, it did not review the boundary determination.

The district court reversed. It agreed that, because the Munsons are not enrolled in the Grouse Creek locality, they could not be members of the Grouse Creek group. However, the court also held that the Munsons’ enrollment in another locality precluded them from being residents of the Grouse Creek locality. It therefore concluded that there were twenty-five residents, not thirty. Because fifteen out of twenty-five residents were members, the district court concluded that the members would constitute a majority of the residents if the ALJ’s boundaries were correct. The court remanded to allow the IBLA to consider the boundary issue.[3]

The Secretary appeals.

Discussion

I

Because the district court remanded to the agency, it is not clear that we have jurisdiction over the appeal. Under 28 U.S.C. § 1291, we have jurisdiction only over appeals from final orders; in general, remand orders are not considered final. See, e.g., Eluska v. Andrus, 587 F.2d 996, 999-1001 (9th Cir. 1978); see also 15 C. Wright, A. Miller & E. Cooper, Federal Practice & Procedure § 3914, at 550-51 (1976). However, a remand order is considered final where (1) the district court conclusively resolves a separable legal issue, (2) the remand order forces the agency to apply a potentially erroneous rule which may result in a wasted proceeding, and (3) review would, as a practical matter, be foreclosed if an immediate appeal were unavailable. See Stone v. Heckler, 722 F.2d 464, 466-67 (9th Cir. 1983); Kaho v. Ilchert, 765 F.2d 877, 880-81 (9th Cir. 1985); Regents of Univ. of Cal. v. Heckler, 771 F.2d 1182, 1186-87 (9th Cir. 1985).

The district court here invalidated the Secretary’s interpretation of the statute, conclusively resolving that separable legal issue. On remand, the IBLA was to set the locality’s boundaries and apply the district court’s interpretation to determine whether the Grouse Creek group met the majority requirement; this proceeding would be a waste if the district court’s interpretation proved erroneous. And, failure to permit immediate appeal might foreclose review altogether: Should the Secretary lose on remand, there would be no appeal, for the Secretary cannot appeal his own agency’s determinations. We therefore conclude that the order is final and appealable under 28 U.S.C. § 1291.

II

Neither the Secretary’s interpretation of the regulations nor the regulations themselves may stand if manifestly contrary to the statute. See Chevron USA, Inc. v. Natural Resources Defense Council, Inc., 467 U.S. 837, 843- 44, 81 L. Ed. 2d 694, 104 S. Ct. 2778 (1984). However, the Secretary’s interpretation is entitled to great deference; even if we would adopt a different interpretation, we must uphold the Secretary’s as long as it is reasonable. Seldovia Native Ass’n v. Lujan, 904 F.2d 1335, 1342 (9th Cir. 1990); Haynes v. United States, 891 F.2d 235, 238-39 (9th Cir. 1989); see Chevron USA, Inc., 467 U.S. at 842-44.[4]

Under the regulations, the BIA must determine whether a Native group meets the majority requirement in two steps. First, it must count the members of the Native group who reside and are enrolled in the locality, 43 C.F.R. §§ 2653.6(a)(4), (a)(5); then it must count all the residents. If more than half of the residents are Native group members, the group is eligible; if half of the residents or fewer are members, it is not. Plaintiffs challenge both the regulation defining who counts toward the majority and who counts as a resident.

A.

According to plaintiffs, Native groups are eligible for conveyances so long as a majority of the residents are Natives; under the Secretary’s regulations, however, Native groups are eligible only if a majority of the residents are members of the Native group seeking the conveyance. 43 C.F.R. §§ 2653.6(a)(4), (a)(5). Whether we count all Natives or members only is critical here. Twenty of thirty residents – a majority – are Natives. But only fifteen residents – less than a majority – are members. This difference arises because one family of five, the Munsons, are Natives, but are not members of the Grouse Creek group.

The statute provides that:

“Native group” means any tribe, band, clan, village, community, or village association of Natives in Alaska composed of less than twenty-five Natives, who comprise a majority of the residents of the locality.

43 U.S.C. § 1602(d).

Plaintiffs argue that because the clause “who comprise a majority of the residents” modifies the word “Natives,” the statute requires that a majority of the residents be Natives and doesn’t require that a majority be members. Admittedly, the clause dangles a bit – it is not entirely clear to whom the word “who” refers. One plausible reading, however, is that the clause modifies the entire preceding phrase – “tribe, band, clan, village, community or village association of Natives” – not just the word “Natives,” thus requiring that a majority of the residents be members of the tribe, band, clan, village, community or village association that seeks the conveyance.

Even if we were to read “who comprise a majority” as modifying Natives, we would still have to rely on the preceding half of the definition in determining to which Natives it refers; the context indicates that the Natives who must comprise a majority of the residents are the twenty-five or fewer Natives who make up the tribe, band, clan, village, community or village association. It is one of these interpretations, neither of which is unreasonable, that the Secretary adopted in his regulations.

As plaintiffs point out, other sections of ANCSA do require Natives, not group members, to constitute a majority of the residents. For example, section 1610(b)(3), which determines the eligibility of certain Native villages for ANCSA benefits, requires “a majority of the residents [to be] Natives.” 43 U.S.C. § 1610(b)(3)(B). Had Congress used identical language in spelling out the criteria for Native groups, 43 U.S.C. § 1602(d), the Secretary would have been required to count all Natives toward the majority requirement. But Congress used different language here, language that is readily susceptible to the Secretary’s interpretation. If anything, Congress’ use of different language in different parts of ANCSA suggests that it meant the provisions to function differently.

The Secretary’s interpretation of 43 U.S.C. § 1602(d) makes sense. The statute takes land out of the public domain and places it in the hands of private groups. See 43 U.S.C. § 1613(h)(2). Residents who are not members will cease to have any rights to use or enjoy the transferred land. Under the plaintiffs’ construction of the statute, the Munsons would count in favor of the transfer even though they, along with the rest of the public, may lose rights as a result. Requiring the recipients of the land – the group members – to make up a majority of the residents ensures that a non-member majority is not denied access to public lands for the benefit of a group-member minority.

We have little difficulty concluding that 43 C.F.R. § 2653.6(a)(4) is not only a permissible, but a sensible, interpretation of 43 U.S.C. § 1602(d). The district court correctly concluded that the Munsons could not count toward the majority because they were not members of the Grouse Creek group.

B.

Having resolved who counts toward the majority, we must now determine who is a resident of the locality. Once again we find the Munsons in the limelight. If the Munsons count as residents, there are thirty residents and the fifteen Grouse Creek group members do not make up a majority; if the Munsons do not, there are only twenty-five residents, and the fifteen Grouse Creek group members constitute a majority.

Neither the statute nor the regulations define resident. The Secretary interpreted it as having its ordinary legal meaning, which is a “person who occupies a dwelling within” the boundary who manifests “a present intent to remain.” Black’s Law Dictionary 1177 (5th ed. 1979). The Munsons have at all relevant times lived within the locality; there is no indication that they have ever planned to leave. The Secretary therefore counted them as residents.

Plaintiffs argue that because the Munsons are enrolled in the Village of Eklutna, they are residents of that village, not of Grouse Creek. They cite 43 U.S.C. § 1604(b), which requires the Secretary of the Interior to enroll Natives in the locality where they reside.

Plaintiffs fail to read section 1604 in its entirety. Section 1604 does make residency as of the 1970 census one basis for enrollment, but it provides exceptions. One allows “the Secretary [to] enroll a Native in a different region when necessary to avoid enrolling members of the same family in different regions. . . .” 43 U.S.C. § 1604(b). Another provides for the enrollment of Natives who weren’t residents of any of the twelve regions when the roll was prepared. See 43 U.S.C. §§ 1604(b)(1)-(b)(4). Thus, the statute does not equate enrollment with residency, and it certainly does not provide that, once enrolled in a locality, Natives are tied to the land like serfs.[5]

The district court was troubled that the Munsons not only didn’t count for the Grouse Creek group, but actually counted against it. The court thought that the presence of one group of Natives – the Munsons – should not deprive another group of Natives of ANCSA land grants to which they would otherwise be entitled. We disagree. Members of Native groups, no less than anyone else, have the right to reside wherever they please and, while there, to enjoy the rights of citizenship. After a conveyance under ANCSA, the Munsons’ legal rights to use the conveyed land would be eliminated in the same way as the rights of non-Native citizens. Thus, considering the Munsons’ presence the same way we consider the presence of non-Natives is entirely sensible.

Conclusion

Although membership has its privileges, under ANCSA and the applicable regulations, those privileges are carefully circumscribed. We conclude that 43 C.F.R. §§ 2653.6(a)(4), (a)(5), which count only members of the Native group toward the required majority, are a reasonable and sensible interpretation of ANCSA’s definition of Native group, 43 U.S.C. § 1602(d). We also conclude that the Secretary’s interpretation of resident as including all persons who live in and intend to remain in the region, regardless of their enrollment, is reasonable and consistent with the statutory scheme.

Because the Secretary properly interpreted valid regulations, the judgment of the district court is affirmed in part and reversed in part. The case is remanded for entry of judgment for the defendants. Defendants shall recover their costs.

I. INTRODUCTION

In this appeal we consider claims arising out of the solicitation of proxies by shareholders of an Alaska Native regional corporation. Because we conclude that certain proxy solicitation statements by the shareholders were materially false as a matter of law, we affirm the superior court’s grant of summary judgment as to those statements. But because the corporation voluntarily dismissed its remaining claims for materially false or misleading proxy solicitation statements, we do not reach the merits of the corporation’s cross-appeal challenging the superior court’s denial of summary judgment as to those claims.

II. FACTS AND PROCEEDINGS

Koniag, Inc. is an Alaska corporation, incorporated under the Alaska Native Claims Settlement Act[1] (ANCSA) as a regional corporation. In December 1997 Koniag held its annual shareholders meeting in Kodiak (1) to elect three directors to the board of directors for three-year terms; and (2) to vote on Proposition 1, which provided for the establishment of a permanent fund as a settlement trust under the provisions of ANCSA.

Koniag shareholders Diane Cooper, Jana Larsen-Horne, and Judy Meidinger sought election to Koniag’s board and solicited proxies in October and November 1997. These three candidates (the Meidinger slate) opposed the adoption of Proposition 1, and their proxy solicitation statements urged voters to reject the trust proposal.

In December 1997 Koniag sued the Meidinger slate for proxy solicitation violations and defamation. Koniag’s complaint alleged that the Meidinger slate made numerous materially false or misleading proxy solicitation statements. The Meidinger slate counterclaimed for breach of fiduciary duty, intended consequences, intentional infliction of emotional distress, and abuse of process.

In May 1999 Koniag moved for summary judgment on each of its claims for materially false or misleading proxy solicitation statements by the Meidinger slate. The Meidinger slate opposed Koniag’s motion and cross-moved for summary judgment on Koniag’s claims. On August 23 the superior court granted Koniag summary judgment on two of its claims for materially false or misleading proxy solicitation statements. But the superior court ruled that genuine factual issues precluded the grant of summary judgment on Koniag’s remaining claims for proxy solicitation violations.[2] The superior court also ruled on the Meidinger slate’s cross-motion for summary judgment, concluding as a matter of law that Larsen-Horne had not misrepresented her status as an associate with the Jamin law firm, but denying the motion as to all other issues.

After the superior court expressed its willingness to grant Koniag injunctive relief based upon the statements the court found to be materially false as a matter of law, Koniag filed a notice of intent not to seek further trial of claims; this notice dismissed Koniag’s remaining claims, but purported to reserve Koniag’s right to argue on cross-appeal that the superior court erred to the extent it failed to grant Koniag summary judgment on its claims of false or misleading proxy.

On September 29 the superior court entered an injunction (1) directing the Meidinger slate to cease and desist from further violations of the law; (2) directing the Meidinger slate, for a period of three years, to file proxy statements and other proxy solicitation materials with the State Division of Banking, Securities, and Corporations for examination and review at least ten working days before a distribution to shareholders; and (3) voiding the proxies obtained by the Meidinger slate.

In July 1999 Koniag moved for summary judgment on the Meidinger slate’s counterclaims. The Meidinger slate opposed Koniag’s motion. On September 27 the superior court dismissed the Meidinger slate’s remaining counterclaims for abuse of process, intentional infliction of emotional distress, and breach of fiduciary duty on summary judgment.[3]

The superior court entered final judgment for Koniag on December 17, 1999. Judy Meidinger appeals.[4] Koniag cross-appeals.

III. DISCUSSION

A. Standard of Review

We review an award of summary judgment de novo and affirm “‘if the evidence in the record fails to disclose a genuine issue of material fact and the moving party is entitled to judgment as a matter of law.'”[5] We draw all reasonable inferences of fact in favor of the nonmoving party.[6] We apply our independent judgment to any questions of law and adopt the rule of law that is most persuasive in light of precedent, reason, and policy.[7]

B. It Was Not Error to Grant Koniag Summary Judgment on Two of Its Claims for Materially False or Misleading Proxy Solicitation Statements by the Meidinger Slate.

The proxy solicitation statements the Meidinger slate distributed in October 1997 opposed the adoption of Proposition 1, which provided for the establishment of a permanent fund as a settlement trust under the provisions of ANCSA. A statement circulated by the Meidinger slate in opposition to the trust asserted: “This proposal gives [Koniag’s] Board way more power than they currently possess. They would be able to appoint themselves as trustees, (more directors fees and compensation), change the terms of the trust and the number of trustees as they see fit.” Another Meidinger slate proxy solicitation statement asserted: “THE PROPOSAL ALSO GRANTS IRREVOCABLE DELEGATION FROM THE SHAREHOLDERS TO THE CURRENT BOARD TO APPOINT AND REMOVE TRUSTEES.”

Koniag argued in its summary judgment motion that these statements were materially false or misleading as a matter of law. The superior court agreed and granted Koniag summary judgment as to these statements. Meidinger appeals this ruling.

The Alaska Securities Act prohibits misrepresentations of material fact in proxy solicitations.[8] Alaska Statute 45.55.160 provides:

A person may not, in a document filed with the Administrator or in a proceeding under this chapter, make or cause to be made an untrue statement of material fact or omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they are made, not misleading.

Alaska’s regulations further provide:

A solicitation may not be made by means of a proxy statement . . . that contains a material misrepresentation. A misrepresentation is a statement that, at the time and under the circumstances in which it is made (1) is false or misleading with respect to a material fact; (2) omits a material fact necessary in order to make a statement made in the solicitation not false or misleading; or (3) omits a material fact necessary to correct a statement, in an earlier communication regarding the solicitation of a proxy for the same meeting or subject matter, which has become false or misleading. [9]

A misrepresentation is material if there is a substantial likelihood that a reasonable shareholder would consider it important in deciding how to vote. Subjective proof that one or more shareholders actually granted a proxy because of a falsehood is not required; only the objective standard encompassed in the definition of materiality need be met.[10]

Materiality is a mixed question of law and fact, “involving as it does the application of a legal standard to a particular set of facts.”[11] In considering whether summary judgment on the issue of materiality is appropriate, we must bear in mind that the determination of materiality involves assessments that are peculiarly ones for the trier of fact:

the underlying objective facts, which will often be free from dispute, are merely the starting point for the ultimate determination of materiality. The determination requires delicate assessments of the inferences a “reasonable shareholder” would draw from a given set of facts and the significance of those inferences to him, and these assessments are peculiarly ones for the trier of fact.[12]

Nevertheless, the issue of materiality may be resolved as a matter of law on summary judgment “if the established [misrepresentations] are ‘so obviously important to an investor, that reasonable minds cannot differ on the question of materiality’ . . . .”[13]

Meidinger first argues on appeal that the statement that the trust proposal gave Koniag’s board the “authority to change the terms of the trust and the number of trustees as they see fit” is not false or misleading under the provisions of the trust proposal. Meidinger cites section 8.5 of the trust agreement, which provides in relevant part: “At any time within ten (10) years of the funding of the trust, the Trustees may reduce the number of Trustees to not fewer than five (5) Trustees.” Meidinger also cites section 18.1(a) of the trust agreement, which provides in part: “At any time during the first three years of the Trust, the Trustees, without the consent of the Beneficiaries, but with the agreement of Koniag, Inc. (acting with approval of its Board of Directors and through its duly elected officers), may amend any technical aspect of the Trust . . . .”

But Meidinger’s argument that the trust agreement grants Koniag’s board the authority to change the terms of the trust and the number of trustees “as they see fit” is contradicted by other sections of the trust agreement and is therefore not persuasive. Section 8.5 of the trust agreement provides that the number of trustees may be reduced only within ten years of the funding of the trust, and the number of trustees may not be reduced to fewer than five. Furthermore, section 18.1 provides trustees with discretion to make only “limited amendments” to the trust agreement, and section 18.3 further limits trustees’ power to amend the trust agreement.[14] We therefore conclude, as did the superior court, that the authority-to-change statement is untrue as a matter of law.

Meidinger next argues that the statement that the trust proposal “grants irrevocable delegation from the shareholders to the current board to appoint or remove trustees” is not false or misleading under the provisions of the trust agreement. Meidinger cites section 8.6 of the trust agreement, which provides in part: “By approving this Trust Agreement, the Board of Directors and shareholders do consent to and ratify the irrevocable delegation by Koniag, Inc. of its authority to appoint and remove the Trustees, to the extent provided by this Trust Agreement.”[15] But section 8.6 addresses the delegation of Koniag’s authority to appoint and remove trustees, and does not purport to delegate the authority of its shareholders. 43 U.S.C. § 1629e(b)(2) grants Native corporations exclusive authority to appoint and remove trustees of a settlement trust; shareholders of a Native corporation do not have any authority to appoint or remove the trustees of a settlement trust. We therefore affirm the superior court’s conclusion that the irrevocable delegation statement is untrue as a matter of law.

Finally, Meidinger argues that summary judgment on the issue of materiality was inappropriate. She contends that because Koniag mailed its shareholders a copy of the proposed trust agreement, the question whether the statements regarding the trust agreement altered the “total mix” of information available to Koniag’s shareholders is one for the trier of fact. Meidinger cites TSC Industries, Inc. v. Northway, Inc., where the U.S. Supreme Court held that an omitted fact is material if there is “a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the ‘total mix’ of information made available.”[16]

We assume for purposes of discussion here that the “total mix” standard applies to cases involving affirmative misrepresentations (as distinguished from omissions of material facts) in proxy solicitation statements. We nonetheless find Meidinger’s argument unpersuasive. As the United States Supreme Court noted in Virginia Bankshares, Inc. v. Sandberg:

[N]ot every mixture with the true will neutralize the deceptive. If it would take a financial analyst to spot the tension between the one and the other, whatever is misleading will remain materially so, and liability should follow. The point of a proxy statement, after all, should be to inform, not to challenge the reader’s critical wits.[17]

Similarly, Koniag’s shareholders cannot be expected to interpret and understand the terms of a trust proposal that even Meidinger’s brief describes as “complex.” Indeed, a proxy solicitation statement that Meidinger distributed in opposing the trust stated: “You must vote no on Proposition 1. . . . If you are thinking about voting yes, first get a lawyer, an accountant so you understand enough to make an informed choice . . . .” (Emphasis added.)

The Meidinger slate’s misrepresentations pertained to the merits of the only proposition scheduled to be considered at Koniag’s 1997 annual meeting. Indeed, Meidinger’s appellate brief describes the trust proposal as “important.” We conclude that the misrepresentations were so obviously important to an investor, that reasonable minds cannot differ on the question of materiality. We therefore affirm the superior court’s grant of summary judgment on the issue of materiality.

C. Meidinger Has Not Established that Alaska’s Proxy Solicitation Regulations Violate the Right to Free Speech Under Article I, Section 5 of the Alaska Constitution.

Meidinger next argues that Alaska’s proxy solicitation regulations are vague and overbroad, and hence violate the right to free speech under article I, section 5 of the Alaska Constitution. But Meidinger’s argument is unsupported by any case law involving proxy solicitations. We therefore reject Meidinger’s constitutional argument.[18]

D. It Was Not Error to Grant Koniag Injunctive Relief Without Conducting an Evidentiary Hearing.

In September 1999 the superior court entered an injunction (1) directing the Meidinger slate to cease and desist from further violations of the law; (2) directing the Meidinger slate, for a period of three years, to file proxy statements and other proxy solicitation materials with the State Division of Banking, Securities, and Corporations (division) for examination and review at least ten working days before a distribution to shareholders; and (3) voiding the proxies obtained by the Meidinger slate. Meidinger contends that it was error for the superior court to grant Koniag injunctive relief without first conducting an evidentiary hearing. Meidinger cites AS 45.55.920(d), which provides that “before issuing an order under . . . this section [for injunctive relief or a civil penalty], the administrator shall give reasonable notice of and an opportunity for a hearing.” We are unpersuaded.

Alaska Statute 45.55.920(d) applies by its terms only to administrative proceedings in the Department of Commerce and Economic Development.[19] It does not apply to judicial proceedings. We have held that an evidentiary hearing is not required in a judicial proceeding in the absence of a genuine issue of material fact.[20] Because we conclude that no genuine fact dispute precluded the grant of summary judgment on two of Koniag’s claims for materially false or misleading proxy solicitation statements by the Meidinger slate,[21] we hold that it was not error to grant Koniag injunctive relief based on those statements without conducting an evidentiary hearing.

E. It Was Not an Abuse of Discretion to Grant Injunctive Relief.

Meidinger next argues that it was an abuse of discretion for the superior court to require the Meidinger slate, for a period of three years, to file proxy statements and other proxy solicitation materials with the division for examination and review before distributing them to shareholders. Meidinger notes that under AS 45.55.920(a)(1)(B), three years is the maximum period that an individual can be required to file proxy statements and other proxy solicitation materials with the division. Meidinger contends that the proxy solicitation violations upon which the superior court based the injunction do not warrant the maximum penalty allowed by AS 45.55.920(a)(1)(B).

We review a grant of injunctive relief for abuse of discretion.[22] Here, the injunction the superior court entered borrowed heavily from the remedies listed in AS 45.55.920(a)(1).[23] As we recognized above, that statute applies by its terms to administrative and not judicial proceedings.[24] But it nevertheless illustrates the types of remedies that the legislature believed to be reasonable upon a violation of Alaska’s proxy solicitation laws. Furthermore, the Meidinger slate distributed the proxy solicitation statements that the superior court found to be materially false and misleading only one year after the division had warned Meidinger “to take more care in future election contests to provide complete disclosure pursuant to the regulations.” The injunctive relief granted by the superior court was therefore not an abuse of discretion.

F. It Was Not Error to Dismiss the Meidinger Slate’s Counterclaims on Summary Judgment.

1. Abuse of process

The Meidinger slate counterclaimed for abuse of process, alleging that “Koniag’s lawsuit was . . . filed to obtain an unfair advantage in pending and future [shareholders’] elections and to intimidate the Meidinger slate from further participation in shareholder elections or from running for office in the future.” The superior court dismissed the abuse of process counterclaim on summary judgment. Meidinger appeals.

The tort of abuse of process consists of two elements: (1) an ulterior purpose; and (2) a willful act in the use of the process not proper in the regular conduct of the proceeding.[25] The second element “contemplates some overt act done in addition to the initiating of the suit. The mere filing or maintenance of a lawsuit — even for an improper purpose — is not a proper basis for an abuse of process action.”[26] “Some definite act or threat not authorized by the process, or aimed at an objective not legitimate in the use of the process, is required . . . .”[27]

The superior court found that there was a genuine factual dispute regarding Koniag’s ulterior purpose.[28] But the superior court dismissed the abuse-of-process counterclaim on summary judgment because it concluded as a matter of law that the Meidinger slate’s allegations did not satisfy the second element of the tort. 

Meidinger argues that a genuine factual dispute regarding the second element of abuse of process — an overt act in addition to the act of initiating a lawsuit — precludes dismissal of the counterclaim on summary judgment. Meidinger contends that Koniag performed the necessary overt act when it (1) sought compensatory and punitive damages from the Meidinger slate; (2) requested injunctive relief denying Jana Larsen-Horne her seat on the board; (3) requested injunctive relief directing a counting of misled shareholders’ votes in favor of Koniag; (4) threatened the Meidinger slate with a large attorney’s fee award; (5) publicized the lawsuit to gain advantage in future shareholder elections; and (6) sent a flyer to its shareholders prior to the election alleging violations of Alaska securities law by the Meidinger slate.

Meidinger’s first four allegations of overt acts are examples of actions taken in the regular course of litigation and therefore cannot be a proper basis for an abuse of process claim.[29] Furthermore, the publicity Koniag accorded the lawsuit was a permissible exercise, if not an obligation, of a corporation about to spend money on litigation expense. We therefore affirm the superior court’s dismissal of the abuse of process counterclaim on summary judgment.

2. Intentional infliction of emotional distress

The Meidinger slate also counterclaimed for intentional infliction of emotional distress (IIED), alleging that Koniag “subjected them to a deliberate campaign of harassment, intimidation, and humiliation designed with the purpose of improving Koniag’s board and management election prospects.” The superior court dismissed the IIED counterclaim on summary judgment.

An IIED claim requires evidence that “‘the offending party, through extreme or outrageous conduct, intentionally or recklessly caused severe emotional distress or bodily harm to another.'”[30] Liability is found “‘only where the conduct [is] so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community.'”[31] The trial court must make a threshold determination “whether the severity of the emotional distress and the conduct of the offending party warrant an instruction on intentional infliction of emotional distress.”[32] We will not overturn this threshold determination absent an abuse of discretion.[33]

Meidinger argues that it was extreme and outrageous for Koniag to (1) file suit three days before the election seeking damages it could not prove and did not want; and (2) send its shareholders before the election a flyer alleging violations of Alaska securities law by the Meidinger slate. Because Koniag’s conduct was not “so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency,”[34] the superior court did not abuse its discretion by making this threshold determination. Furthermore, to the extent that the IIED claim is based on Koniag’s lawsuit against the Meidinger slate, filing that lawsuit is privileged and cannot be the basis of IIED liability.[35] We therefore affirm the grant of summary judgment.

3. Breach of fiduciary duty

The Meidinger slate’s breach-of-fiduciary-duty counterclaim alleged that “Koniag owed a duty to Judy Meidinger, Jana Larsen[-Horne], and Diane Cooper not to initiate any lawsuit against them that would not be in the overall interest of shareholders.” The superior court dismissed the counterclaim on summary judgment, stating that “the evidence and arguments presented do not justify the maintenance of this cause of action.”

“Directors, officers, and possibly controlling shareholders, owe fiduciary duties to their corporation and possibly to other shareholders.”[36] But Meidinger cites, and we have found, no authority for the proposition that a corporation, such as Koniag, owes its shareholders fiduciary duties. Because we are not persuaded that a corporation owes its shareholders fiduciary duties, we conclude that the superior court properly dismissed the breach-of-fiduciary-duty counterclaim on summary judgment.

G. It Was Not Error to Award Koniag Attorney’s Fees and Costs.

The superior court awarded Koniag, as the prevailing party, costs of $ 10,773 and partial attorney’s fees of $37,784 under Alaska Civil Rules 79 and 82. Meidinger argues that it was an abuse of discretion to characterize Koniag as the prevailing party for purposes of awarding attorney’s fees and costs, because (1) the superior court dismissed Koniag’s defamation cause of action on summary judgment; and (2) the superior court did not award Koniag compensatory or punitive damages, although Koniag had originally requested such damages.[37]

The superior court has discretion to determine which party is the prevailing party for purposes of awarding attorney’s fees and costs, and we will reverse only for an abuse of discretion.[38] The prevailing party is the one “who has successfully prosecuted or defended against the action, the one who is successful on the ‘main issue’ of the action and ‘in whose favor the decision or verdict is rendered and the judgment entered.'”[39] A party need not prevail on all the issues in a case to be the prevailing party.[40]

The main issue in this case was whether the Meidinger slate’s proxy solicitations contained materially false and misleading statements. The superior court ruled that two statements were materially false and misleading as a matter of law, and the court granted Koniag injunctive relief. It was therefore not an abuse of discretion to characterize Koniag as the prevailing party for purposes of awarding attorney’s fees and costs.

H. The Issues Raised in Koniag’s Cross-Appeal Have Not Been Properly Preserved.

In its cross-appeal, Koniag contends that the superior court erroneously denied Koniag’s summary judgment motion (or granted only partial summary judgment) with respect to a number of its claims alleging materially false or misleading proxy solicitation statements by the Meidinger slate. Koniag argues that the Meidinger slate made materially false or misleading statements regarding (1) the taxability of assets distributed to the proposed trust; (2) the removal of trustees; (3) the accountability of trustees to Koniag’s shareholders; (4) the return of certain lands to the villages of Karluk and Larsen Bay; (5) the withholding of information by Koniag’s management from the corporation’s shareholders; and (6) Koniag’s lack of profitability.

But Koniag has not preserved these issues for review in its cross-appeal. After the superior court expressed its willingness to grant Koniag injunctive relief based upon the statements the court found to be materially false and misleading as a matter of law, Koniag dismissed its remaining claims against the Meidinger slate. Although Koniag’s notice of intent not to seek further trial of claims purported to reserve its remaining claims for our review by cross-appeal, such a reservation is ineffective. By dismissing these claims voluntarily, Koniag gave up any right to have their merits considered on appeal. It is also not necessary for us to consider Koniag’s cross-appeal arguments as alternative grounds for affirmance. We therefore do not reach the merits of Koniag’s cross-appeal.

IV. CONCLUSION

For these reasons, we AFFIRM the judgment of the superior court in all respects.

I. INTRODUCTION

Gertrude Demmert and Jessie Jim appeal the superior court’s denial of their claims that Kootznoowoo, Inc., distributed corporate wealth and benefits in a discriminatory manner, that the corporation attempted to conceal its discriminatory practices from its shareholders, and that director conflicts of interest invalidated certain corporate programs. Because the superior court made findings of fact supported by the evidence that resolve these issues in favor of Kootznoowoo, we affirm the superior court’s denial of appellants’ claims.

II. FACTS AND PROCEEDINGS

Kootznoowoo is the Native village corporation for the village of Angoon. Its primary business is managing approximately 21,440 acres of timberlands selected pursuant to Section 506 of the Alaska National Interest Lands Conservation Act. Appellants are shareholders of the corporation.

One of Kootznoowoo’s major activities respecting its lands is cutting timber. This activity presented a unique challenge, as the corporation was unable to select the lands surrounding Angoon for resource development. Kootznoowoo was forced to exchange its rights to land surrounding Angoon, on Admiralty Island, for lands on distant Prince of Wales Island. For some time, this meant that Kootznoowoo hired others to transport, process, and load its logs. Southeast Stevedoring Corporation provided the longshoring and stevedoring services necessary to load Kootznoowoo’s logs.

In the summer of 1988 the management of Southeast Stevedoring approached Pat Joensuu of Kootznoowoo with a proposal for loading logs at a site in Dora Bay located near Kootznoowoo’s timberlands. Southeast Stevedoring recognized that if Kootznoowoo could establish a mooring system and log loading facility near its timberlands, it could avoid the costs and risks involved in towing log rafts to remote locations. Eventually, the two parties agreed to establish such a log loading facility, with Kootznoowoo providing the camp facilities and work force and Southeast Stevedoring providing management expertise and mooring buoys for the ships.

Kootznoowoo established a shareholder hiring preference for the longshoring work, and in order to gather the necessary labor force, the corporation helped to pay workers’ transportation costs. While Kootznoowoo understood the payment of travel costs for laborers working at remote sites to be standard industry practice,[1] the corporation could not afford to pay the entirety of the costs. Thus, Kootznoowoo paid for about half of the longshore workers’ transportation costs.[2] While the longshoring positions were open to all Kootznoowoo shareholders, Kootznoowoo would only pay travel costs for group trips originating in Angoon. The corporation believed that this ensured a more fully available, flexible, and coordinated crew of workers.

Meanwhile, Southeast Stevedoring managed the labor force, selected and trained workers for “skilled” positions, and negotiated with customers rates for loading logs “which recognized that transportation for longshore workers was a cost that should be passed through to the log owner.”

Longshore workers could perform one of two types of work for the joint venture: skilled or unskilled. Southeast Stevedoring maintained an “active skilled working list” of people that would be dispatched to fill skilled positions in upcoming jobs. Southeast Stevedoring decided who to place on this list, who to dispatch for work, and who to consider for advancement. For unskilled positions, Kootznoowoo kept a rotation list of shareholders eighteen years or older who were capable of and willing to perform longshoring work. Southeast Stevedoring informed Kootznoowoo of the need for unskilled workers as it arose, and Kootznoowoo notified individuals whose names came up on the rotation list.

Appellants brought suit to challenge several aspects of Kootznoowoo’s longshoring program, as well as the corporation’s partial payment of longshore workers’ travel costs. The superior court found for Kootznoowoo, upholding both its participation in the joint venture longshoring program and its practice of paying longshore workers’ travel costs.

III. DISCUSSION

A. Neither Kootznoowoo’s Distribution of Longshoring Employment Opportunities nor the Corporation’s Payment of Longshore Workers’ Travel Costs Constituted Discriminatory Distribution of Corporate Wealth or Dividends.

Appellants contest Kootznoowoo’s distribution of longshoring opportunities as well as its payment of “travel subsidies” for longshore workers. They argue that by paying for longshore workers’ transportation and lodging, Kootznoowoo is distributing corporate wealth in a manner that discriminates among its shareholders. Appellants also argue that because the corporation only subsidizes travel to and from Angoon, it excludes shareholders outside of Angoon from its pool of qualified workers. They claim that the opportunity to work as a longshore worker and the payment of travel subsidies constitute a form of wealth “not available to the 63.1% of Kootznoowoo’s shareholders who reside elsewhere.” Thus Kootznoowoo’s operation of its longshoring program treats corporate shares in a discriminatory manner, violating the corporation’s contract with its shareholders, as well as the Equal Treatment Rule codified in AS 10.06.305 -.308, and -.313,[3] applicable to the Alaska Native Village Corporation through the Alaska Native Claims Settlement Act §§ 7(h)(1)(A) and 8(c).[4]

Kootznoowoo responds that its decision to enter into the joint venture with Southeast Stevedoring, its resulting employment of Kootznoowoo shareholders in longshoring positions, and its partial payment of those longshore workers’ transportation costs[5] were all directed at maximizing the financial and employment opportunities of its general shareholder population. Because of the unique placement of its timberlands – remote from Kootznoowoo’s headquarters in Angoon – the corporation faced a special challenge in finding a profitable way to process and load its logs. Kootznoowoo thus hoped to profit by processing its logs in a location convenient to its timberlands and by providing the labor for that work. As stated by the corporation’s comptroller: “If you could provide for the profit motive and hire shareholders, why not? It was a …good practice for the corporation.”

While appellants contend that Kootznoowoo’s payment of transportation costs caused the corporation losses and imply that this demonstrates an intent to merely distribute benefits to selected shareholders, Kootznoowoo argues that achieving a coordinated and productive labor force demanded that it pay some of the longshore workers’ costs. Otherwise, many shareholders could not afford to travel to the remote Dora Bay site, and Kootznoowoo’s plan to save money by utilizing its own worksite and labor force would fail. Kootznoowoo additionally asserts that it chose to pay transportation costs only to and from Angoon, because efficiency and maximum profit demanded that it have coordinated teams of workers ready to fly out together to work. Kootznoowoo thus maintains that its actions were in the best interests of all of its shareholders and that its contributions toward travel costs were not discriminatory dividends, but instead necessary and ordinary business expenses.[6]

The superior court’s findings of fact support Kootznoowoo’s claims. These findings confirmed the existence of the Kootznoowoo/Southeast Stevedoring joint venture and concluded that both parties “believed that the …joint venture could develop Dora Bay into a major log port/ship loading facility to handle not only Kootznoowoo’s logs, but also logs for Sealaska Corporation, ITT-Rainier, Reid Brothers Timber, Klukwan Forest Products, Ketchikan Pulp Company, Cape Fox, etc.” The superior court recognized that Pat Joensuu “projected Kootznoowoo’s share of the potential log loading revenues at over $ 2 million.” These findings are based on the testimony of several Kootznoowoo board members as well as internal memoranda and correspondence between members of the board and indicate the board’s intent to benefit Kootznoowoo and its general population of shareholders.

Regarding Kootznoowoo’s payment of travel costs for its labor force, the superior court found that “Kootznoowoo and Southeast Stevedoring considered transportation of longshore workers to and from the remote work site at Dora Bay to be an ordinary and necessary business expense,” and that Southeast Stevedoring accounted for this expense by negotiating rates with the joint venture’s outside customers “which recognized that transportation for longshore workers was a cost that should be passed through to the log owner.” These findings are based in part on testimonial evidence. Both Gerald Engel (Kootznoowoo’s Lands and Resources Manager) and James Taro (President of Southeast Stevedoring) testified that it was common practice for log owners or stevedoring companies to pay transportation costs for longshore workers. In fact, one of the joint venture’s competitors, West Coast Stevedoring, paid the entirety of transportation and lodging costs when it had employed Kootznoowoo shareholders as longshore workers. Moreover, Kootznoowoo was able to deduct its transportation payments as a business expense on its federal income tax returns. In addition, the superior court points out that “there was no transfer of corporate assets without consideration. Kootznoowoo received consideration for the expense of transportation of longshorepersons between Angoon and Dora Bay in the form of work and increased profits.”

Regarding Kootznoowoo’s decision to only subsidize charter flights to and from Angoon, the court found credible the corporation’s explanation that it was attempting to maximize efficiency and productivity by maintaining well-organized and prepared teams of workers. The court decided that “hiring from Angoon assured an available pool of full complement longshoring gangs to timely meet the needs of the ship loading joint venture.”

On the whole, the superior court concluded that “Kootznoowoo’s policy of paying a portion of the travel costs of shareholders between Angoon and Dora Bay was not adopted as a distribution to its shareholders, but as a program that would increase Kootznoowoo’s profits and encourage shareholder employment.” The court thus affirmed Kootznoowoo’s motives and practices and rejected appellants’ claims that the corporation was distributing corporate wealth and benefits in a discriminatory manner. The superior court based its finding upon a great deal of documentary and testimonial evidence. We do not think that its findings are clearly erroneous,[7] and thus we uphold its findings and resulting conclusions.

B. Kootznoowoo Did Not Attempt to Hide or Fail to Provide Necessary Information to Its Shareholders.

Appellants also contend that Kootznoowoo failed to inform all of its shareholders of the longshoring employment opportunities and travel subsidies available. Kootznoowoo responds that it did indeed inform its shareholders of the longshoring and travel subsidy programs. The corporation claims to have posted longshoring lists and its Longshore Assignment Policy conspicuously around Angoon, as well as publishing general information about the longshoring program in corporation newsletters.

Once again, based upon documentary and testimonial evidence, the superior court’s findings of fact support Kootznoowoo. The court found that “Kootznoowoo’s Longshore Assignment Policy was conspicuously posted in Angoon and sent to all longshorepersons” and that “Kootznoowoo’s management and its board of directors made no attempt to hide or conceal any aspect of Kootznoowoo’s Longshore Assignment Policy, including what has been referred to as the ‘travel subsidy. ‘”The court also noted in its findings that “the large number of shareholders participating in the longshoring program (approximately 155) creates the very strong inference that important aspects of Kootznoowoo’s Longshore Assignment Policy, including what has been referred to as the ‘travel subsidy, ‘were known by many shareholders throughout the Native corporation.” As the superior court’s findings are not clearly erroneous, we uphold its conclusion that Kootznoowoo neither failed to provide necessary information to its shareholders, nor hid such information from them.

C. There Was No Conflict of Interest among the Kootznoowoo Directors as to the Joint Venture Longshoring Program.

Finally, appellants claim that Kootznoowoo’s participation in the longshoring and “travel subsidy” programs is improper, because this participation was never approved by a majority of disinterested directors or shareholders. Appellants claim that most of the directors who approved the programs were “interested” in that they used the longshoring employment opportunities and travel subsidies to benefit themselves and selected shareholders.

Kootznoowoo argues that it broadly distributed information about the longshoring and “travel subsidy” programs to all – not just selected – shareholders and furthermore that it had no control over who got called to take advantage of these programs. The corporation explains that Southeast Stevedoring determined the number of workers needed for joint venture projects and selected those qualified to be on the active skilled workers list. Kootznoowoo asserts that it merely maintained a rotation list of unskilled workers and notified those workers when their names came up on rotation. Kootznoowoo also notes that only one person – Frank Jack, Jr., – ever served as both a Kootznoowoo director and a longshore worker at the same time, and that Mr. Jack was a skilled and experienced longshore worker before he ever became a director; he became a director well after the longshoring and “travel subsidy” programs were instituted. 

The superior court again made findings of fact consistent with Kootznoowoo’s position. With regard to the process of assigning longshoring work, the court agreed that Kootznoowoo had no control over who qualified for the skilled worker list or how many workers would be designated for a job; Southeast Stevedoring controlled this. Thus the court found no systemic way in which Kootznoowoo directors manipulated longshoring assignments to benefit themselves or other shareholders. The court reinforced this point by noting that Southeast Stevedoring selected individuals for the skilled worker list based on individual merit, not share ownership. While appellants alleged that many members of the Jack family especially benefitted from the programs, the court stated that “the evidence supports the finding that members of the Jack family attained their ‘skilled’ positions on the basis of individual merit,” and that “the frequency of their dispatch reflects their willingness to accept dispatch assignments.”

Once again, these findings, based on the totality of the evidence, are not clearly erroneous. They support the superior court’s conclusion that Kootznoowoo’s longshoring and travel subsidy programs were not illegally adopted or maintained by the board based on director conflicts of interest.

IV. CONCLUSION

Based on the foregoing reasons, the judgment is AFFIRMED.

Concur by: FABE

Concur

FABE, Chief Justice, concurring.

Although I continue to believe that plaintiffs’ allegations should have proceeded as derivative actions,[1] I agree with the court that Judge Weeks correctly decided this case on the merits.

OPINION [*]

I. INTRODUCTION

This appeal concerns attorney’s fees and indemnification disputes arising after the superior court dismissed a derivative suit brought by shareholders of an Alaska Native Claims Settlement Act (ANCSA) village corporation. The plaintiffs sued without first making the pre-suit demand Alaska law requires. After the superior court dismissed the complaint for mootness, both sides sought attorney’s fees and costs. Concluding that the shareholders did not prove that a pre-suit demand was excused, the superior court held that they were not prevailing parties and denied their attorney’s fees motion. Finding that the defendant directors were prevailing parties, the court awarded them Alaska Civil Rule 82 attorney’s fees against the plaintiff shareholders, and ordered the corporation to indemnify them under AS 10.06.490(c). Because the superior court did not err in holding that the shareholders did not prove that a demand was excused, we affirm the denial of the plaintiffs’ fees request. But because the directors did not establish that they were Rule 82 prevailing parties, we vacate their attorney’s fees award. And because they did not establish that they were “successful” litigants, we hold that they were not entitled to indemnification under AS 10.06.490(c).

II. FACTS AND PROCEEDINGS

Carl J. Jerue, Jr. and Ernie Demoski, Sr. (“plaintiff shareholders”) are shareholders of Ingalik, Incorporated, the ANCSA village corporation for the Native village of Anvik. Gloria Millett, Kenneth Chase, Shannon Chase, and Ted Kruger, Jr. (“defendant directors”) were members of Ingalik’s board of directors as of January 1998. On January 12, 1998 the Alaska Department of Commerce and Economic Development issued the corporation a Certificate of Involuntary Dissolution, citing the corporation’s failure to file a biennial report or pay taxes.

On January 22, 1998 the plaintiff shareholders filed a derivative complaint against the defendant directors, alleging financial mismanagement and other wrongdoing. The complaint asked the court to compel the defendant directors to hold an annual shareholders’ meeting to elect a new board of directors; to appoint Jerue as an interim director with authority to take whatever action was necessary to reinstate the corporation; and to issue a temporary restraining order prohibiting the defendant directors from “winding up” the corporation’s affairs and distributing any corporate assets. Summonses were issued for the individual defendants on January 22, 1998.

In January Ingalik made reinstatement efforts; it returned to good standing with the state and was reinstated on February 6, 1998.

On April 6 the directors moved to dismiss. They argued that the plaintiff shareholders had not demonstrated that their failure to make a demand on the board was excused. They also argued that the complaint was moot because the corporation had been reinstated, it had scheduled an annual meeting, and its reinstatement meant its assets would not be distributed.

Ingalik held an annual shareholders’ meeting on April 25. The shareholders reorganized the board by electing new directors, including both plaintiff shareholders; only one incumbent, defendant Kruger, was reelected. The new board met the next day and passed resolutions authorizing the corporation to join the lawsuit as a party plaintiff and denying indemnification to the defendant directors.

The plaintiff shareholders then asked the superior court to join Ingalik as a party plaintiff; the court did so on June 8. But on the same day, it also entered an order dismissing the derivative suit with prejudice. It retained jurisdiction for the purpose of determining prevailing party status and awarding costs and attorney’s fees.

The defendant directors moved for a Civil Rule 82 fees award against the plaintiff shareholders individually; they also sought an order requiring Ingalik to indemnify their litigation costs under AS 10.06.490(c). The plaintiff shareholders and Ingalik (the “plaintiffs”) opposed these requests and, claiming that they were the prevailing parties because the requested relief was achieved, cross-moved for an award of fees against the defendant directors under Civil Rules 23.1(j) and 82(a). Both sides relied on numerous documents in addition to their pleadings.

Following oral argument, the superior court ruled for the defendant directors on the fees and costs motions. It reasoned that the plaintiff shareholders had the burden of proving that they were excused from making the formal pre-suit demand Civil Rule 23.1(c) requires; it also reasoned that the directors’ alleged practices gave rise to “any number of conflicting inferences” and “by no means” demonstrated that a majority of the directors were implicated in an injury to the corporation. It therefore concluded that a demand was not excused, that the defendant directors were entitled to dismissal under Civil Rule 23.1(d), and that the defendant directors were the prevailing parties under Civil Rule 82. It also concluded that the defendant directors’ prevailing party status entitled them to full indemnification from the corporation under AS 10.06.490(c).

The judgment awarded the defendant directors $ 26,656.96 against Ingalik under AS 10.06.490(c) to indemnify their attorney’s fees and costs, and $ 3,804.16 against Jerue and Demoski individually as costs and Rule 82 attorney’s fees. The award against Ingalik included the amount awarded against the individual plaintiff shareholders, and the judgment prevented the directors from recovering more than the total amount awarded against Ingalik.

Ingalik and the plaintiff shareholders argue on appeal that the superior court erred by (1) failing to award them costs and fees under Civil Rules 82 and 23.1(j) and AS 10.06.435(j); (2) granting costs and Civil Rule 82 attorney’s fees to the defendant directors against the plaintiff shareholders; and (3) requiring the corporation to indemnify the defendant directors under AS 10.06.490(c).

III. DISCUSSION

A. Standard of Review

We apply our independent judgment to questions of statutory interpretation[1] and must “adopt the rule of law that is most persuasive in light of precedent, reason, and policy.”[2]

For reasons we discuss in Part III.B.2, we review for abuse of discretion the superior court’s fact-based determination that the plaintiff shareholders did not prove that a pre-suit demand was excused.[3] The legal effect of that finding on the plaintiffs’ motion for an award of litigation expenses presents a question of law which we review by applying our independent judgment.

Because it presents questions of law, we apply our independent judgment in reviewing the ruling that, because the plaintiff shareholders failed to prove that a demand was excused, the defendant directors were the prevailing parties under Rule 82(a).[4] A determination of prevailing party status under Rule 82(a) will not be overturned unless it is manifestly unreasonable.[5] We apply our independent judgment in reviewing the ruling that the defendant directors’ prevailing party status entitled them to AS 10.06.490(c) indemnification, because this ruling presents a question of law.

B. Denial of Costs and Attorney’s Fees to the Plaintiffs

Jerue, Demoski, and Ingalik first argue that it was error not to award them costs and attorney’s fees against the defendant directors.[6] They reason that they secured the relief their complaint sought, rendering the derivative suit “successful”; this made them, not the directors, the prevailing parties, entitling them to recover costs and fees from the defendant directors under Civil Rules 82(a) and 23.1(j) and AS 10.06.435(j).[7]

Alaska Statute 10.06.435(j) and Alaska Civil Rule 23.1(j) permit awards of expenses, including attorney’s fees, to derivative suit plaintiffs. The statute and the rule are identical. They provide in pertinent part that “if the derivative action is successful, in whole or in part, or if anything is received as a result of the judgment, compromise, or settlement of that action, the court may award to the plaintiff or plaintiffs reasonable expenses, including reasonable attorney fees.”[8]

Civil Rule 23.1(j) is a fee-sharing rule. It requires the corporation benefitted by a derivative suit to share the expense incurred by the plaintiff shareholders in achieving the benefit for the corporation. [9] It reaches this result by requiring the corporation to reimburse the plaintiff shareholders. Because it is a fee-sharing rule, Rule 23.1(j) does not give the corporation itself a claim for fees or provide for an award against individual defendants.[10] Moreover, here Ingalik’s successor board adopted a resolution authorizing Ingalik to reimburse “all legal fees and costs” incurred in behalf of Jerue and Demoski. Because the corporation has voluntarily agreed to share any litigation expense incurred by or for Jerue and Demoski individually, Rule 23.1(j) has no further direct application to this case: Its fee-sharing purpose was achieved without court order.

To illustrate the true nature of Ingalik’s fees claim, we assume that a Rule 23.1(j) fees award could indirectly give rise to a corporate claim against derivative suit defendants. Thus, perhaps a corporation ordered under Rule 23.1(j) to reimburse successful derivative-suit plaintiffs could seek indemnification, possibly on a subrogation theory, from the defendant officers or directors whose acts were the basis for the derivative suit and the Rule 23.1(j) award. But the court did not order Ingalik to pay those expenses; the corporation voluntarily agreed to pay them by resolution of April 26, 1998. And a subrogated claim would give the corporation no greater rights than the plaintiff shareholders had. In short, no plaintiff in this case has a claim against these defendants under Rule 23.1(j).

Unlike Rule 23.1(j), Rule 82(a) is a fee-shifting rule.[11] Rule 82(a) provides for an award of attorney’s fees to “the prevailing party.” It is the proper framework for considering whether the defendant directors should reimburse attorney’s fees directly incurred by Ingalik and attorney’s fees incurred by or for Jerue and Demoski and potentially recoverable by Ingalik under an assignment or subrogation theory.

Because this is a shareholder derivative action, the question whether the plaintiffs were “prevailing parties” under Rule 82(a) ultimately depends at least in part on the principles that determine whether a shareholder derivative suit has been “successful.” As we will see, this question turns on whether the superior court erred in concluding that the shareholders did not establish that their failure to make a demand on the board before suing was excused. This is so because, even though the plaintiff shareholders’ litigation goals were achieved, there was a dispute about why they were achieved.

The shareholders filed suit in late January 1998 seeking reinstatement of the corporation and a shareholders’ meeting at which new directors could be elected. The state reinstated the corporation in early February 1998. This prevented dissolution and distribution of corporate assets. The corporation held a shareholders’ meeting to elect directors in April 1998. The relief the complaint sought was thus achieved, and in June the superior court dismissed the complaint with prejudice, apparently because the complaint was mooted by the corporation’s reinstatement and the annual meeting.[12] 

We assume that derivative suit plaintiffs may not necessarily be ineligible to recover litigation expenses under Rule 23.1(j) even though a court dismisses their lawsuit after the board’s remedial actions moot their derivative suit claims.[13] Filing suit may force a recalcitrant board to act, securing a valuable benefit to the corporation. This may also be sufficient to make plaintiff shareholders (and a plaintiff corporation for whom they acted) “prevailing parties” for Rule 82(a) purposes.

We think that whether plaintiff shareholders are “prevailing parties” in a shareholder derivative action should turn on whether their lawsuit is “successful in whole or in part.”[14] If a corporate benefit is achieved, the focus is on the causal relationship between the lawsuit and the benefit.[15]

We assume here that the individual plaintiffs and Ingalik were benefitted by actions — reinstating the corporation and holding the annual meeting–taken after the plaintiff shareholders sued. But were these actions the result of the suit? Or would they have been taken if the shareholders had made a formal demand before suing? Or, indeed, would they have been taken even absent either a pre-suit demand or any suit at all?

As we will see, the superior court’s rejection of Jerue and Demoski’s assertion that a demand was excused resolves these questions for purposes of the plaintiffs’ motion for costs and attorney’s fees.

1. The requirement of a pre-suit formal demand

Before filing a shareholder derivative suit, a plaintiff is required by AS 10.06.435(c) and Civil Rule 23.1(c) to make a formal demand on the board “to secure the action the plaintiff desires,” unless that demand is “excused.”[16] The statute and the rule excuse the demand requirement if “a majority of the directors is implicated in or under the direct or indirect control of a person who is implicated in the injury to the corporation.”[17]

The statute and the rule require a shareholder who fails to make a formal demand to plead “with particularity” the facts establishing excuse.[18] The statute and the rule also impose on a shareholder opposing a motion to dismiss the burden of establishing excuse: “In a motion to dismiss for failure to make demand on the board the shareholder shall have the burden to establish excuse.”[19]

Jerue and Demoski argue that they satisfied these requirements, despite their failure to make any pre-suit demand on the board; they assert that a demand would have been “futile.”

The demand requirement is an important aspect of corporate democracy. Among other things, it gives the corporation a fair opportunity to decide whether to take action directly and to receive the proceeds of any recovery.[20] And it gives the corporation an opportunity to remedy problems internally, without exposing it to avoidable litigation expense.[21] The FLETCHER CYCLOPEDIA discusses the demand requirement:

The particularized pleading requirements are designed to strike a balance between a shareholder’s claim of right to assert a derivative claim and a board of director[s’] duty to decide whether to invest resources of the corporation in pursuit of the shareholder’s claim of corporate wrong. But the requirements of demand futility and refusal of demand are predicated upon and inextricably bound to issues of business judgment and standards of that doctrine’s applicability. The demand requirement in derivative proceedings serves as a form of notice to the corporation. It is designed to assure that the shareholder affords the corporation the opportunity to address the alleged wrong without litigation and to control any litigation which does occur. It also provides a safeguard against abuse that could undermine the basic principle of corporate governance that the decisions of a corporation, including the decision to initiate litigation, should be made by the board of directors. A determination on a motion to dismiss, whether based on demand refused or demand excused, involves essentially a discretionary ruling on a predominantly factual issue. The demand should provide the directors with sufficient information regarding the standing of the plaintiff, the relief sought, and the grounds for relief. In some states, the demand must be in written form. The directors have a reasonable time within which to investigate the claim and to make a decision, although some state statutes set forth a final time period. The demand inquiry and authority to respond may be delegated to a special litigation committee.[22]

2. Applicable standard of review

We have never before addressed the demand requirement of AS 10.06.435(c) and Civil Rule 23.1(c), and have consequently never adopted a standard for reviewing a conclusion that shareholders did not meet their burden of establishing excuse.

Most appellate courts review for an abuse of discretion a trial court’s determination that the demand requirement was not excused.[23] They typically apply that standard because determining the necessity of a demand is a fact-based inquiry. For example, in Lewis v. Graves, the United States Court of Appeals for the Second Circuit, applying the federal analog to Alaska Civil Rule 23.1,[24] held that “the decision as to whether a plaintiff’s allegations of futility are sufficient to excuse demand depends on the particular facts of each case and lies within the discretion of the district court.”[25]

Until recently, the mother court of corporate law,[26] the Delaware Supreme Court, followed the same approach.[27] But in Brehm v. Eisner, that court, applying the Delaware counterpart to Alaska Civil Rule 23.1, held that this issue is subject to de novo review.[28] The court stated that “in a Rule 23.1 determination of pleading sufficiency . . . this Court[] is merely reading the English language of a pleading and applying to that pleading statutes, case law and Rule 23.1 requirements. To that extent, our scope of review is analogous to that accorded a ruling under Rule 12(b)(6).”[29]

In comparison, the United States Court of Appeals for the Third Circuit applies a mixed standard of review. In Garber v. Lego it stated: 

To the extent that we are reviewing the district court’s determination of demand futility based upon the facts of this case, the scope of our review is for abuse of discretion. Our review of the legal precepts employed by the district court and of its interpretation of those legal precepts is plenary.[30]

We choose to follow the Third Circuit, and therefore adopt a mixed standard of review. We agree with the Delaware Supreme Court that it is a question of law whether pleadings satisfy a legal standard, such as the demand requirement. But the question of demand excuse potentially also involves fact-based analysis which is better reviewed under the abuse of discretion standard. This case demonstrates the factual nature of these disputes. A mixed standard of review recognizes that the superior court made both legal and factual determinations when it ruled, after considering materials beyond the pleadings, that the shareholders did not prove that demand was excused.

3. Excusing the failure to make a pre-suit demand

The pre-suit demand required by AS 10.06.435(c) and Alaska Civil Rule 23.1(c) is excused if “a majority of the directors is implicated in or under the direct or indirect control of a person who is implicated in the injury to the corporation.”[31]

Delaware and the federal courts frame the exception to the demand requirement in terms of futility.[32] In those courts, making a demand is considered futile and thus excused where corporate officers and directors are under an influence rendering them incapable of making decisions for the corporation.[33] Courts following the futility-of-demand principle apply procedural rules that differ from Alaska Civil Rule 23.1. Federal Civil Rule 23.1 and Delaware Chancery Court Rule 23.1 are very similar to each other[34] and with regard to the demand requirement are nearly identical. Their pleading requirements implicitly address futility, but do not specify criteria for deciding when futility excuses a failure to make a demand: 

The complaint shall also allege with particularity the efforts, if any, made by the plaintiff to obtain the action the plaintiff desires from the directors or comparable authority . . . and the reasons for the plaintiff’s failure to obtain the action or for not making the effort.[35]

It is not necessary in this case to decide whether excuse in Alaska is the same as excuse elsewhere. Alaska Statute 10.06.435(c) and Alaska Civil Rule 23.1(c) were not modeled after a specific state provision or model code.[36] Although our standard is similar to that applied in some other jurisdictions to discern when demand would be futile,[37] the plain text of our rule provides a specific test for excuse: establishing that a majority of the directors are “implicated in the injury to the corporation.”[38] The Alaska Code Revision Commission’s study of Alaska’s proposed revised Corporations Code before it was enacted in 1988 supports this interpretation: 

Section .435c requires that a qualified shareholder make a demand upon the board to secure such action as the plaintiff desires, unless the shareholder can show that such demand would be futile. Under Section .435(d), the burden to establish excuse is upon the plaintiff-shareholder. If a demand on the board is not excused, Section .435(e) provides that a decision by the board, consonant with its duties of care and loyalty, that in its business judgment such litigation would not be in the best interest of the corporation, terminates the right created by Section .435(a). A shareholder is thereafter precluded from offering evidence that any or all of the directors who have decided that the litigation not go forward are implicated in the wrong complained of.[39]

4. Demand in this case

Because the superior court did not base its denial of the shareholders’ fees motion on the sufficiency of their complaint, it is unnecessary to decide whether their complaint satisfied the requirement that it “state with particularity the facts establishing excuse . . . .”[40] The court instead ruled after it reviewed the documents the parties submitted or discussed when they briefed the excuse issue in their competing motions for attorney’s fees. The superior court held that “the practices complained of give rise to any number of conflicting inferences — but by no means demonstrate that ‘a majority of the directors [were] . . . implicated in [an] injury to the corporation.’ “

Moreover, because there was no injury to the corporation, the superior court did not abuse its discretion by so holding. The plaintiff shareholders submitted numerous documents to support their request for attorney’s fees and to oppose the defendant directors’ requests for attorney’s fees and indemnification. But these materials and the remainder of the undisputed record did not establish that the board would have rejected a demand to reinstate the corporation and hold the annual meeting. Nor did they establish that the lawsuit achieved these benefits. Instead, the record contains evidence that would have permitted a finding that the board would have reinstated the corporation and held the meeting whether or not there was a demand or a lawsuit. This included evidence (attached to the plaintiffs’ complaint or found in affidavits they submitted to the superior court) that the defendant directors had attempted to hold the annual meeting as recently as the prior fall; that they had met only thirty-six days before the plaintiffs filed suit; that even before the plaintiffs sued, the defendant directors had written the corporation’s shareholders to encourage them to fill vacancies on the board until the next annual meeting and election; that they had already scheduled a shareholders’ meeting for June; and that when the corporation had failed to pay its taxes in the past, on each occasion it was reinstated and its assets were not liquidated. Moreover, plaintiffs’ exhibits listed corporate checking account transactions; one is for a January 7, 1998 check payable to the State of Alaska for “biennal [sic] filing fee,” suggesting that the directors had taken steps to reinstate the corporation weeks before plaintiffs filed suit.[41]

5. How the unexcused failure to make demand affects plaintiffs’ attorney’s fees motion.

The plaintiff shareholders cannot recover litigation expenses because their case was dismissed for mootness before they either made a demand or proved that demand was excused. Failure to prove that demand was excused necessarily means that they did not show that the corporation would not have been reinstated and that the annual meeting would not have been held if they had not sued. Because the court dismissed their action for mootness, the plaintiffs could not recover litigation expenses unless they showed that their suit was “successful,” i.e., that it conferred some measurable benefit on the corporation even though the court dismissed their complaint. But by failing to prove that a demand was excused, they necessarily failed to establish that the board would not have reinstated the corporation and held the annual meeting but for the lawsuit.

In the narrow context of derivative suits, failure to make a demand or prove that demand was excused is fatal to an award of attorney’s fees and costs because a pre-suit demand might have prompted remedial action without need for litigation. The policy rationale of the demand requirement dictates this result. Demand is required to give a corporation the opportunity to rectify an alleged wrong without litigation and to control any litigation which does arise.[42] Awarding litigation expenses without a demand or proof of demand excuse would undermine the demand requirement and these policy objectives. Moreover, the modern reality of large corporations requires this result. At any given moment a large corporation may be the subject of a number of derivative suits filed by shareholders. In this context, almost any action taken by a corporate board could arguably satisfy some plaintiff’s lawsuit. Awarding fees without requiring demand or proof of demand excuse would open corporations to unwarranted fees claims predicated on unrelated corporate actions.

In this case, without proof of demand excuse, and particularly given Ingalik’s past course of corporate events, the trial court permissibly might have found that this corporation would have been reinstated and the meeting held even without a demand or a lawsuit. Therefore, the shareholders’ failure to prove that demand was excused meant that they did not prove that the derivative suit was “successful.”[43] This meant that Jerue and Demoski were not entitled to an award of attorney’s fees and costs.

An inverse hypothetical helps demonstrate the significance of failing to make a demand or prove demand excuse. Consider a dissenting shareholder whose attorney makes a timely demand upon directors before filing a derivative suit. If the directors promptly take curative action that satisfies the shareholder’s concerns, there would be no suit and clearly no attorney’s fees awarded to the shareholder. This illustrates the importance of the demand requirement and explains why we must affirm the denial of fees to Jerue and Demoski. The reasoning is twofold: First, if the hypothetical shareholder who satisfies the demand procedure is not entitled to attorney’s fees, it is inequitable to award fees to shareholders who failed to make a demand or prove that it was excused. Second, awarding fees to Jerue and Demoski would undermine successful operation of the demand requirement as illustrated above, and encourage wasteful litigation that could have been avoided if demand were properly made.

Ingalik has not clearly explained on what theory it should be awarded fees. It must demonstrate its prevailing party status to recover fees under Rule 82(a). But if the plaintiff shareholders who asserted claims in the corporation’s behalf are not prevailing parties, we do not see how the corporation can be a prevailing party as to those claims, either. Any attorney’s fees claim Ingalik could pursue under subrogation or assignment theories to recover its voluntary payment of Jerue and Demoski’s fees would be subject to the considerations that bar Jerue and Demoski’s fees motion. Ingalik apparently also seeks an award for the post-joinder fees it incurred directly. But because Ingalik did not become a party plaintiff until after the events occurred that mooted the derivative suit, it is not a prevailing party for purposes of recovering those fees, either.

We therefore conclude that the superior court did not err in denying the plaintiffs’ attorney’s fees motion.

3. The Defendant Directors’ Rule 82 Attorney’s Fees Award

The superior court awarded the defendant directors Rule 82 prevailing party attorney’s fees against Jerue and Demoski. In arguing that this was error, Jerue and Demoski contend in part that they, not the directors, were the prevailing parties because their complaint was dismissed for mootness and because they “accomplished what they had hoped to with this litigation.” They assert that the “burden was on the former management to argue and show that the annual meeting . . . would have happened without the suit.”

A litigant seeking Rule 82 attorney’s fees must show that it is the prevailing party.

We first reject the directors’ assertion that, because the superior court granted their motion to dismiss with prejudice, they were the prevailing parties.[44] Because the court dismissed the complaint for mootness, it is no more likely that the directors achieved their litigation goals than the plaintiffs.

The court apparently based its finding that the directors were the prevailing parties on its October conclusion that the shareholders had not proved that demand was excused. This conclusion did not alter the reason for the June dismissal or turn the dismissal order into a ruling on the merits. Dismissing for mootness did not explicitly or implicitly resolve the issue of who prevailed, and indeed, the court stated it was retaining jurisdiction to decide “prevailing party status.” That question turned on an issue — whether demand was excused — the court had not resolved in June.

We assume for discussion’s sake that if a shareholder derivative lawsuit were the only reason directors took remedial actions benefitting a corporation and mooting the complaint, the directors would not be the prevailing parties.[45] And as we noted in Part III.B, under some circumstances plaintiffs may be able to recover attorney’s fees in at least some types of cases dismissed for mootness.[46] But the ruling that these plaintiffs did not bear their burden of proving excuse did not amount to a finding that the board would have heeded a pre-suit demand or that its remedial actions were unrelated to the lawsuit.

In general, we are reluctant to encourage parties in a lawsuit dismissed for mootness to litigate the merits only to establish for Rule 82 purposes who would have been the hypothetical prevailing party. Rule 82 is only intended to partially compensate prevailing parties, not to provide an incentive for merits litigation that would not otherwise take place.[47]

Evidence, discussed in Part III.B.4, would have permitted a finding that the directors would have cured the corporate deficiencies absent the lawsuit. But the memorandum opinion awarding fees did not refer to this evidence. And it did not find that the directors would have remedied the deficiencies either spontaneously or in response to a pre-suit demand. Nor did it find that the actions that mooted the complaint and benefitted the corporation were not attributable to the lawsuit. The evidence would not have compelled such findings. The directors provided no direct evidence why they acted, and no director offered an affidavit explaining why the old board acted. The superior court recognized when it denied the shareholders’ Rule 23.1(j) attorney’s fees motion that there were conflicting inferences about whether a majority of the directors were implicated in an injury to the corporation. These conflicting inferences were also relevant to the reasons the board acted.

In summary, the plaintiffs’ failure to meet their burden of proving that a formal demand was excused did not necessarily mean that the directors were the prevailing parties. Because the complaint was dismissed as moot shortly after its filing as a result of the defendants’ apparently responsive actions, it would be unrealistic to treat the directors as prevailing parties unless they demonstrated why the suit became moot, i.e., why the corporation was reinstated and the annual meeting was accelerated. Notwithstanding other evidence permitting conflicting factual inferences, the directors offered no direct evidence why things were done that gave the plaintiffs the relief they requested. Because we conclude as a matter of law that the directors did not meet their burden of proof on the issue of prevailing party status, we vacate their Rule 82 attorney’s fees award and remand for entry of a corrected judgment.[48]

D. The Directors’ Statutory Indemnification Award

The superior court ruled that the directors’ “prevailing party status also” entitled them under AS 10.06.490(c) to full indemnification from Ingalik.[49] The plaintiff shareholders and Ingalik argue that because the court did not find the election and all subsequent board action to be invalid, the business judgment rule required the court to enforce the new board’s resolution that denied indemnification to the defendant directors.[50] The defendant directors respond that because indemnification under AS 10.06.490(c) was mandatory, the board had no authority to adopt a resolution denying them indemnification.[51]

This issue turns on whether the defendant directors satisfied their burden of demonstrating that they were entitled to indemnification under AS 10.06.490(c). We conclude that they did not. We therefore vacate the indemnification award and remand for entry of a corrected judgment.

It appears that indemnification is mandatory if the conditions of AS 10.06.490(c) are met, because that subsection provides that a corporate director who “has been successful on the merits or otherwise” in defense of certain lawsuits — including derivative suits — “shall be indemnified.”[52] We assume that if this subsection applies, mandating indemnification, the board has no discretion to adopt a resolution denying indemnification.

But to be eligible for mandatory indemnification under AS 10.06.490(c), these defendant directors had to have “been successful on the merits or otherwise in defense of an action . . . .”[53] The defendant directors did not demonstrate that they successfully defended the litigation on its “merits or otherwise”; they simply obtained dismissal of the complaint, apparently by providing the relief the complaint sought. As discussed in Part III.C, above, the defendant directors did not establish why the remedial actions were taken. The conflicting inferences about how the lawsuit came to be mooted also pertain to the issue whether the directors successfully defended the litigation. Because the defendant directors did not establish why action was taken that mooted the complaint, they did not meet their burden of establishing a right to mandatory indemnification under AS 10.06.490(c). The plaintiffs’ failure to prove that a demand was excused does not mean that the defendant directors must have been “successful” in defending the suit. The complaint was dismissed for mootness, not on a theory demand was unexcused.

Few cases discuss equivalent situations. Courts requiring mandatory indemnification under substantially identical statutes do so when the defendant achieves success on the merits or otherwise, including termination of claims by agreement without any payment or assumption of liability.[54] Courts are reluctant to ask why the result was achieved.[55] But in those cases, it appears that the defendants did nothing to achieve the dismissal; they certainly paid no consideration, and they took no corrective action that mooted the lawsuits.

Because the superior court did not apply the statutory standard for determining whether the defendant directors were entitled to indemnification under AS 10.06.490(c), we must vacate the indemnification award. And because the directors simply asserted below that the dismissal with prejudice entitled them to indemnification, they failed to establish that the dismissal was not attributable at least in part to a desire to resolve the lawsuit. We therefore remand for entry of a corrected judgment that deletes the indemnification award.

IV. CONCLUSION

The plaintiff shareholders are not prevailing parties because the court found that their failure to make a demand was not excused. In the absence of a demand, it is uncertain whether the defendant directors would have responded to a demand as they responded to the lawsuit, affording the plaintiffs the relief they sought. Although the suit might factually have brought about the relief, this is not enough. Plaintiffs must show that a demand would not have resulted in the same relief. Because this is difficult to show and the difficulty is a product of their failure to make a demand, they can not be regarded as prevailing parties.

The defendant directors are not prevailing parties because they did not prove that the lawsuit was not a cause of the remedial action they took, or that if a demand had been made they would have taken the remedial action.

For these reasons, we (1) AFFIRM the superior court’s holding that the plaintiff shareholders were not prevailing parties and were consequently not entitled to attorney’s fees under Civil Rules 23.1 and 82; (2) VACATE the award of costs and Civil Rule 82 attorney’s fees to the defendant directors against the plaintiff shareholders; (3) VACATE the defendant directors’ award of indemnification under AS 10.06.490(c); and (4) REMAND for entry of a corrected judgment reflecting that all parties are to bear their own costs and attorney’s fees.[56] 

Dissent by: CARPENETI

Dissent

CARPENETI, Justice, dissenting.

I agree with the court’s conclusion that the plaintiffs were not excused from the requirement that they make a demand on the corporation before filing suit, and that their failure to make a demand precludes their recovery of attorney’s fees. But because a review of the record shows that the superior court dismissed the complaint precisely because the plaintiffs failed to carry their burden of showing that their failure to make a demand was excused, I dissent from Parts III.C. and III.D of today’s ruling.

In vacating the superior court’s award of attorney’s fees to the defendant directors, today’s opinion assumes that the superior court dismissed the complaint for mootness: “In June the superior court dismissed the complaint with prejudice, apparently because the complaint was mooted by the corporation’s reinstatement and the annual meeting.”[1] It concludes that a dismissal for mootness did not establish that the defendant directors were the prevailing parties. The court’s assumption that the complaint was dismissed for mootness is incorrect.

A review of the record shows that, at the time the case was dismissed, the superior court did not specify a reason for its action. Under our well-established case law, when a trial court does not specify a reason for its decision, we may review the record and affirm if any basis for the court’s action is supported by the record.[2] Moreover, by the time of its final ruling,[3] the superior court unmistakably based its decision on the plaintiffs’ unexcused failure to make a demand on the corporation.

Although unspoken, the court’s opinion today suggests that, once a superior court announces a rationale for its decision, it may not change it. But this is not the law. We have consistently upheld the proposition that one superior court judge who inherits a case from another superior court judge is free to reexamine and reverse an earlier decision in that case if convinced that it is erroneous: “It [is] entirely reasonable for a judge whose responsibility it is to try a case to reconsider and reverse an earlier ruling if convinced that that ruling was erroneous.”[4]

If one judge may reconsider and reverse a predecessor judge’s ruling in a case, then a fortiori a single judge may reconsider and modify the basis for his or her own earlier ruling in a case. That is what happened in this case, as a review of the record shows.

The record establishes: (1) that the defendants proposed three reasons to dismiss the case; (2) that the superior court dismissed the case without specifying the reason for the dismissal; (3) that at the same time the court declined to award attorney’s fees to either side but set the matter on for a hearing; (4) that at the beginning of the hearing the court suggested one basis for the dismissal, mootness; but (5) during the hearing the court suggested a different basis for the dismissal; and (6) that by the time of its written order shortly thereafter the superior court unambiguously held that it dismissed the case because demand was not excused. I examine each of these events in turn.

Defendant directors offered three reasons for dismissing the case. The first, and most extensively argued, was that the plaintiffs had not shown that their failure to make a demand on the corporation was excused. Accordingly, we can uphold the dismissal on this ground. Indeed, the court today rests its affirmance of the superior court’s denial of attorney’s fees to plaintiffs on this very ground.[5]

It is true that, at the time the superior court granted the motion for dismissal, it did not state a reason for its decision; it even modified the defendant’s proposed order by striking language awarding fees to the defendants. Rather, in what can only be described as a cautious approach to a difficult issue, the court “retained jurisdiction to determine prevailing party status and to award costs and fees as may be appropriate.”

At the commencement of the hearing to address the question of attorney’s fees, it is also true that the superior court suggested that mootness might be the grounds for its action.[6] But during the course of the hearing the superior court, through its probing of counsel for both sides, made quite clear that it considered the plaintiffs’ failure to make a demand, and the lack of excuse for that failure, to be critical to its earlier decision to dismiss. For example, the court stated, “Rule 23.1 says [the plaintiffs] bear the burden of proving that the demand was excused.” Later, the court noted that “the demand is the part of this case that’s giving me the biggest problem right now. What have you done to bear the burden of proving that the demand was excused in this case?” Finally, the court observed, if the plaintiffs were alleging inaction “on the part of the directors, isn’t it just commonsensical that you would first ask them to take the action you want?”

All of these statements call into question this court’s conclusion that the superior court dismissed the case on mootness grounds. And, by the end of the hearing and the filing six days later of the superior court’s written decision, it is quite clear that the court had dismissed the case on the basis of the plaintiffs’ failure to show that their lack of demand was excused: 

Under Alaska R. Civ. P. 23.1(d), a shareholder who files suit without having made the formal demand contemplated by Rule 23.1(c) bears the burden of proving that demand was excused. . . . Demand was not excused and defendants were thus entitled to dismissal pursuant to Alaska R. Civ. P. 23.1(d). Consequently, they must be recognized as the “prevailing party” entitled to recover attorney’s fees.

Thus, while the superior court’s original order of dismissal did not specify the grounds for dismissal, the court plainly stated in its final order after the hearing to determine the prevailing party that the plaintiffs’ failure to make a demand “was not excused and defendants were thus entitled to dismissal pursuant to Alaska R. Civ. P. 23.1(d).“

In sum, the whole record establishes that the superior court dismissed the case due to the plaintiffs’ failure to make a formal demand. Because the superior court’s ruling on the merits was that the plaintiffs failed to show that the demand requirement was excused, the director defendants were successful on the merits and were the prevailing party. Also, because the director defendants were successful on the merits, they are entitled to mandatory indemnification. I would, therefore, affirm the judgment of the superior court in its entirety. At the very least, given our demonstrated uncertainty concerning the basis for the superior court’s decision, we ought, in fairness to the superior court, to remand the case and allow the superior court to make clear the basis upon which it dismissed the case.

I. INTRODUCTION

Plaintiffs seek to enforce a settlement agreement. The superior court determined that the agreement is unenforceable because the agreement’s stock repurchase provision violates the Alaska Native Claims Settlement Act’s (ANCSA) prohibition on the alienation of shares. Because we conclude that transfer of ANCSA stock back to a Native corporation in exchange for stock in a newly created corporation violates ANCSA, we affirm.

II. FACTS AND PROCEEDINGS

The Tetlin Native Corporation (TNC) is a village corporation formed pursuant to ANCSA and organized as an Alaska business corporation. On July 17, 1996, TNC transferred approximately 643,174 acres of its land to the Tetlin Tribal Council.[1] This left TNC with 100,000 acres of land.

Subsequently, the appellants, Shirley Jimerson and Ramona David, conducted a campaign to recall TNC’s board of directors. The campaign was successful, and on January 12, 1999, Jimerson and David were elected to the board.

On March 15, 1999, TNC and Jimerson and David, as directors and individual shareholders (collectively Jimerson),[2] filed a complaint in Alaska Superior Court in Fairbanks against certain shareholders and directors of TNC. The complaint alleged breach of fiduciary duties and wrongful transfer of TNC land, and requested $ 257,200,000 in damages and declaratory and injunctive relief. On April 20, 1999, the case was removed to the United States District Court for the District of Alaska.

On August 6, 1999, the Jimerson board was recalled. The new board passed a resolution that TNC dismiss all law suits brought by the Jimerson board. On October 6, 1999, TNC moved to dismiss without prejudice all claims it had against the shareholders and former and current directors of TNC. The district court denied TNC’s motion to dismiss and urged the parties to reach a settlement.

The court’s advice bore fruit, and the parties reached a settlement agreement. In August 2001 the district court approved the agreement and entered judgment on it.[3] The settlement agreement acknowledged that TNC shareholders may not have been fully informed regarding dissenters’ rights in the 1996 land transfer and provided for

[a] transfer of a portion of Tetlin Native Corporation’s remaining lands . . . to a new corporation to be formed by dissenting shareholders . . . who elect to transfer their shares of Tetlin Native Corporation ANCSA stock back to the corporation in exchange for shares in the new corporation.

In May 2003 Jimerson filed a motion in district court to enforce the settlement agreement. TNC opposed the motion and moved for relief from the judgment, contending that the district court lacked subject-matter jurisdiction. The district court concluded that the case presented no substantial federal question and declared the judgment based on the settlement agreement void for lack of jurisdiction. The case was then remanded to the superior court.

On February 23, 2004, Jimerson filed a motion in the superior court to enforce the settlement agreement. TNC opposed the motion, arguing that the settlement agreement was unenforceable as against public policy for three reasons: (1) the agreement provided for an exchange of shares in violation of ANCSA’s prohibition on alienation, (2) the agreement violated the Alaska Corporations Code, and (3) the attorney for plaintiffs had a conflict of interest.

On June 18, 2004, the superior court denied Jimerson’s motion to enforce the settlement agreement on the grounds that the agreement was unenforceable because it violated ANCSA’s prohibition on alienation.[4] 

Jimerson appeals this denial.

III. DISCUSSION

We have adopted the Restatement principle that “[a] promise or other term of an agreement is unenforceable on grounds of public policy if legislation provides that it is unenforceable . . . .”[5] This court has “no power, either in law or in equity, to enforce an agreement which directly contravenes a legislative enactment.”[6]

The issue before this court is whether the transaction contemplated by the settlement agreement is prohibited by ANCSA. The settlement agreement transferred a portion of TNC’s remaining land to a new corporation and then allowed “dissenting shareholders” to “transfer their shares of Tetlin Native Corporation ANCSA stock back to the corporation in exchange for shares in the new corporation.”

Issues of statutory interpretation are questions of law which we review de novo.[7]

ANCSA section 7(h)(1)(B) prohibits ANCSA stock from being sold, pledged, assigned, or otherwise alienated, subject to exceptions set out in section 7(h)(1)(C).[8] ANCSA does not define the term “alienated,” and this court has not had occasion to interpret the term. “[U]nless words have acquired a peculiar meaning, by virtue of statutory definition or judicial construction, they are to be construed in accordance with their common usage.”[9] Black’s Law Dictionary defines “alienate”: “To transfer or convey (property or a property right) to another.”[10] Webster’s defines “alienate”: “to convey or transfer (as property or a right) [usually] by a specific act rather than the due course of law.”[11] The settlement agreement contemplates that dissenting shareholders “transfer” their ANCSA shares to TNC. Dissenting shareholders do not retain any right or interest in their ANCSA shares. The language of the statute suggests that the term “alienate” includes transfer of ANCSA stock back to a village corporation in exchange for stock in a newly created corporation.

Jimerson argues that the specific prohibitions listed in subsection 7(h)(1)(B)(i)-(v) do not apply to organic changes such as the share exchange contemplated in the settlement agreement. Jimerson argues that under the principle of ejusdem generis the general term “otherwise alienate” refers only to the same kinds of transactions specifically listed in subsection 7(h)(1)(B)(i)-(v) and therefore does not refer to a share exchange made during an organic change.

We do not find Jimerson’s argument persuasive for two reasons. First, Jimerson points to no authority for the proposition that subsection 7(h)(1)(B)(i)-(v) does not apply to organic changes. As we discussed above, the language of the statute suggests that an individual shareholder alienates her stock by transferring it back to a village corporation in exchange for stock in another corporation.[12] We see no reason why the same principle would not apply to situations where many or all shareholders act at once. Whether shares are alienated by a single shareholder or by many shareholders pursuant to a formal plan for organic change, there is no indication that Congress intended to eliminate statutory protections by allowing ANCSA shareholders to exchange their shares for those of another corporation. Second, ANCSA provides specific exceptions to the section 7(h)(1)(B) restrictions. When Congress enumerates exceptions to a rule, we can infer that no other exceptions apply. Section 7(h)(1)(C) lists three exceptions that allow stock to be transferred to a Native or a descendent of a Native: (1) pursuant to a court decree of separation, divorce, or child support, (2) if the stock limits the holder’s ability to practice his or her profession, or (3) as an inter vivos gift to certain relatives.[13] Section 7(h)(2) permits shares to escheat to the corporation if the holder has no heirs, and permits a corporation to repurchase shares transferred by the laws of intestate succession to a person who is not a Native or descendant of a Native.[14] The transaction contemplated by the settlement agreement does not fall within any of these exceptions. We therefore infer that no exception applies for transfer of ANCSA stock back to a Native corporation in exchange for stock in a newly created corporation.

Jimerson argues that the legislative history of the 1987 ANCSA amendments shows that section 7(h)(1)(B) does not prevent holders from transferring shares back to a Native corporation. While Jimerson argues that allowing holders tosell their shares back to a Native corporation is not necessarily inconsistent with the legislative history, she has not shown a contrary legislative purpose to a plain language interpretation of the statute.[15] The legislative history available is sparse and equivocal.[16] In fact, portions of the legislative history suggest that a Native corporation does not have the power to repurchase its own shares.[17]

The language of section 7(h)(1)(B) indicates that the transaction contemplated by the settlement agreement violates ANCSA. That the transaction does not fall within ANCSA enumerated exceptions confirms this interpretation. Jimerson has failed to demonstrate through the use of legislative history a contrary legislative purpose. We therefore hold that the settlement agreement is unenforceable because it directly contravenes the section 7(h)(1)(B) restrictions on ANCSA stock.

IV. CONCLUSION

We AFFIRM the superior court’s denial of Jimerson’s motion for enforcement of the settlement agreement.

MEMORANDUM [*]

Minchumina Natives, Inc. (“MNI”) seeks land under the Alaska Native Claims Settlement Act (“ANCSA”), 43 U.S.C. §§ 1601-1629h. MNI brought suit against the United States Department of the Interior (“DOI”) requesting declaratory relief. The district court dismissed the claim, holding that MNI lacks corporate capacity to sue. We affirm.

We recognize that the entity before this court is the current iteration of the for-profit corporation that was created in 1975. ANCSA provides that in order to claim land, an entity must be incorporated “under the laws of Alaska.” 43 U.S.C. § 1613(h)(2). Here, the for-profit corporation was dissolved in 1993. At the time MNI applied for reinstatement in November 2005, it did not qualify for reinstatement under Alaska law. The plain language of Alaska Stat. § 10.06.960(k) limits its application to “Native village corporations” formed under ANCSA. MNI is not now and never has been a “Native village corporation” under § 10.06.960(k) or a “Village Corporation” under ANCSA because it does not have twenty-five or more members. See 43 U.S.C. §§ 1602(c), (j).

There is no indication that the Alaska legislature intended the term “Native village corporation” in § 10.06.960(k) to have a different meaning from its definition under ANCSA. The Alaska legislature has shown that it knows how to specify the types of Native corporations it intends to address. In subsection (i) of the same statute, the legislature used the umbrella term “Native corporation under the Act” to describe a separate reinstatement procedure. Alaska Stat. § 10.06.960(i). The statute also provides that “‘Native corporation’ has the meaning given in 43 U.S.C. § 1602(m).” Id. § 10.06.960(p)(2). Section 1602(m) defines “Native Corporation” to include any Regional, Village, Urban, and Group Corporation. 43 U.S.C. § 1602(m). Accordingly, we can infer that the Alaska legislature was aware of the different types of corporations under ANCSA, and specified which of those corporations were eligible for reinstatement under Alaska Stat. § 10.06.960(k): village corporations.

MNI’s argument that it qualifies for treatment as a “Village Corporation” because there was no definition for “Group Corporation” in the original version of ANCSA is unavailing. Native groups have always been free to form a corporation under Alaska law to pursue a land claim under ANCSA, even if they do not qualify as a village corporation. MNI has plainly never met the definition for treatment as a “Village Corporation.”

In sum, Alaska law does not permit reinstatement in this instance. Administrative agencies “are creatures of statute and therefore must find within [a] statute the authority for the exercise of any power they claim.” McDaniel v. Cory, 631 P.2d 82, 88 (Alaska 1981). The State agency acted outside of its statutory authority in reinstating MNI’s corporate status, rendering invalid MNI’s 2005 Certificate of Reinstatement. Therefore, MNI lacks the capacity to sue.

AFFIRMED.

In 1976, Omar Stratman began his quest to challenge the Secretary of the Interior’s (the “Secretary”) certification of Woody Island as a native village under the Alaska Native Claims Settlement Act (“ANCSA”). Thirty-two years later, we must decide whether Congress ratified the Secretary’s favorable 1974 eligibility determination when, in 1980, it enacted the Alaska National Interest Lands Conservation Act (“ANILCA”) which listed Woody Island’s village corporation, Leisnoi, Inc. (“Leisnoi”), as a “deficiency village corporation” entitled to lands under ANCSA. We hold that it did. Therefore, we dismiss Stratman’s appeal as moot.

BACKGROUND

Statutory Framework

I. ANCSA

Congress enacted ANCSA in 1971 in order to “resolve land disputes between the federal government, the state of Alaska, Alaskan Natives, and non-native settlers.” Leisnoi, Inc. v. Stratman, 154 F.3d 1062, 1064 (9th Cir. 1998). In its findings and declaration of policy, Congress recognized “an immediate need for a fair and just settlement” of aboriginal land claims that was to be “accomplished rapidly, with certainty, in conformity with the real economic and social needs of Natives, [and] without litigation . . . .” 43 U.S.C. § 1601(a), (b). In furtherance of this basic purpose, “Alaskan Natives received, in exchange for the extinction of all claims of aboriginal title, approximately forty-four million acres of land and nearly $1 billion in federal funds.” Leisnoi, 154 F.3d at 1064. These resources were distributed amongst thirteen “Regional Corporations,” groups of Natives unified by a “common heritage and sharing common interests[,]” 43 U.S.C. § 1606(a), and an unspecified number of “Village Corporations,” corporate entities based around native villages. 43 U.S.C. § 1607. The native villages were defined to include “any tribe, band, clan, group, village, community, or association in Alaska” either listed by name or determined by the Secretary to have met certain requirements. 43 U.S.C. § 1602(c).

To qualify as a “native village” under ANCSA, the Secretary must determine that:

(A) twenty-five or more Natives were residents of an established village on the 1970 census enumeration date as shown by the census or other evidence satisfactory to the Secretary, who shall make findings of fact in each instance; and
(B) the village is not of a modern and urban character, and a majority of the residents are Natives.

43 U.S.C. § 1610(b)(2). Department of the Interior (“DOI”) regulations establish procedures for determining village eligibility, and initially envisioned that these determinations would be made by the end of 1973; the Director of the Juneau Area Office (“Regional Director”) of the Bureau of Indian Affairs (“BIA”) was required to make an initial determination of eligibility not later than December 19, 1973, 43 C.F.R. § 2651.2(a)(8), and protests to the eligibility determination were barred if brought 30 days after publication of the decision, id. at § 2651.2(a)(9). The Regional Director was required to render a decision as to the protest within 30 days, id. at § 2651.2(a)(4), and appeal from that decision could be taken before the Interior Board of Land Appeals (“IBLA”), id. at § 2651.2(a)(5). That decision would not become final until personally approved by the Secretary. Id.

Although ANCSA fixes the total allocation from the Federal government to village corporations at twenty-two million acres, the final allocation of land to each village corporation depends upon the distribution of Native Alaskans in eligible villages. First, the area included in the patent issued to the village corporation varies based on the number of natives residing in the village: for example, a village with twenty-five Native Alaskans is entitled to patent an area of public lands equal to 69,120 acres, while a village with a population of over 600 is entitled to 161,280 acres. See 43 U.S.C. § 1613(a). Next, any difference between the twenty-two million acres reserved for village corporations and the amount of land actually claimed by eligible villages as discussed above must be reallocated “on an equitable basis after considering historic use, subsistence needs, and population.” 43 U.S.C. § 1611(b).[1] The final allocation of lands to eligible village corporations is therefore contingent upon the resolution of the eligibility of all other putative villages within each regional corporation. Further, the village allocations affect the computation of lands granted to the regional corporations, if the area patented to the village corporations within a regional corporation exceeds the percentage of acreage allotted to the regional corporation based on its relative size within the state. See 43 U.S.C. § 1611(c)(1)–(2).

Once a village is deemed eligible, its village corporation may select lands pursuant to 43 U.S.C. § 1611. In those situations where land selection criteria cannot be met because of a deficiency of available lands, the Secretary must “withdraw three times the deficiency from the nearest unreserved, vacant and unappropriated public lands[,]” withdrawing, “insofar as possible, . . . lands of a character similar to those on which the village is located and in order of their proximity to the center of the Native village[.]” 43 U.S.C. § 1610(a)(3)(A).

The foregoing eligibility and land selection provisions of ANCSA created problems for villages within the Koniag, Inc. (“Koniag”) region, Leisnoi’s regional corporation, because of a shortage of available lands on Kodiak Island. A further problem for Koniag, and the village corporations in the region, was uncertainty over the status of several putative villages. In the mid- through late-1970s, eleven villages brought suits challenging ineligibility determinations made by the Secretary. See Koniag, Inc. v. Andrus, 188 U.S. App. D.C. 338, 580 F.2d 601, 603-04 (D.C. Cir. 1978). Congress addressed these problems in ANILCA.

II. ANILCA

Although ANILCA is generally concerned with the designation, disposition, and management of land for environmental preservation purposes, see ANILCA, Pub. L. No. 96-487, § 101, 94 Stat. 2371, 2374-75, (codified at 16 U.S.C. § 3101), part of ANILCA is devoted to the implementation and cleanup of ANCSA. In particular, Part A of Title XIV includes amendments to ANCSA, and Part B contains “Other Related Provisions.” See 94 Stat. 2374 (Table of Contents). Those provisions resolve extant membership, land, and village status questions. See id. Section 1427 concerned issues specific to Koniag and was referred to as the “Koniag Amendment.”

Section 1427(a) contains several definitions relevant to this dispute. Because of the deficiency of available lands on Kodiak island, the Koniag villages had been previously assigned deficiency lands on the Alaska Peninsula by the Secretary. These lands, described as “Deficiency village acreage on the Alaska Peninsula,” were defined as “the aggregate number of acres of public land to which ‘Koniag deficiency Village Corporations’ are entitled under section 14(a) [43 U.S.C. § 1613] . . . .” § 1427(a)(2), 94 Stat. 2518. The subsection also defined “Koniag deficiency village corporation” explicitly to include Leisnoi. See § 1427(a)(4), 94 Stat. 2519 (“‘Koniag deficiency village corporation’ means any or all of the following: . . . Lesnoi, Incorporated[.]”). Another definition made Leisnoi eligible, upon Koniag’s designation, to receive land under § 12(b) of ANCSA, 43 U.S.C. § 1611(b), as a “village corporation listed . . . above[.]” § 1427(a)(5).

Subsection (b) contains several relevant substantive provisions. First, it provides that “[i]n full satisfaction of . . . the right of each Koniag Deficiency Village Corporation to conveyance under [ANCSA] of the surface estate of deficiency village acreage on the Alaska Peninsula . . . and in lieu of conveyances thereof otherwise, the Secretary of the Interior shall, under the terms and conditions set forth in this section, convey . . . lands on Afognak Island . . . .” § 1427(b)(1), 94 Stat. 2519-20. Pursuant to this exchange of lands on Afognak Island for those on the Alaska Peninsula, the claims of the deficiency villages and Koniag to lands on the Peninsula would be extinguished, all claims arising under ANCSA or this section of ANILCA relating to this transaction would be barred, and the land would be included within the Alaska Peninsula Wildlife Refuge. § 1427(b)(3), 94 Stat. 2522.

Subsection (e) resolves an ongoing legal dispute involving the eligibility challenges by the eleven villages. See Koniag, 580 F.2d at 601. By releasing the United States and its agents from all prior claims arising under ANCSA, they would “be deemed an eligible village” under ANCSA. § 1427(e)(1), 94 Stat. 2525. Finally, subsection (f) provides that “[a]ll conveyances made by reason of this section shall be subject to the terms and conditions of [ANCSA] as if such conveyances (including patents) had been made or issued pursuant to that Act.” § 1427(f), 94 Stat. 2526.

Section 1412, in Part A of Title XIV, states that, “[e]xcept as specifically provided in this Act, (i) the provisions of [ANCSA] are fully applicable to this Act, and (ii) nothing in this Act shall be construed to alter or amend any of such provisions.”

Procedural History

In 1976, Stratman and several other plaintiffs filed suit in the District of Alaska, seeking to enjoin the Secretary from issuing lands to three villages on or around Kodiak Island, one of which was Woody Island, on the ground that the villages did not satisfy ANCSA’s certification requirements. This action, No. CV 76-132, has been referred to by the parties as the decertification action.

The district court initially dismissed the claims made by the plaintiffs asserting recreational use of Woody Island because those plaintiffs did not exhaust their administrative remedies under 43 C.F.R. § 2651.2. Kodiak-Aleutian Chapter of the Alaska Conservation Soc’y v. Kleppe, 423 F. Supp. 544, 546 (D. Alaska 1976). However, Stratman and another plaintiff, Toni Burton, avoided dismissal on the ground that, as the owners of grazing leases potentially affected by Leisnoi’s land selections, they were entitled to actual notice of Woody Island’s certification. Leisnoi later mooted Stratman’s action by relinquishing all claims to the land involving the grazing leases, see Stratman v. Andrus, 472 F. Supp. 1172, 1173 (D. Alaska 1979), and the district court dismissed Stratman’s claim on that basis. Id. at 1174. This court reversed the district court, holding that Stratman’s claim was not barred by a failure to exhaust administrative remedies because he was not given actual notice of the certification, and that he still had standing to sue on the basis of his alleged recreational use. Stratman v. Watt, 656 F.2d 1321, 1324-25 (9th Cir. 1981). We remanded to provide Stratman with the opportunity to pursue his administrative remedies. Id. at 1326.

On remand, in 1982, the parties entered into a settlement agreement. The failure of the parties to abide by the terms of the settlement agreement eventually resulted in our determination that Stratman could reopen the decertification action in federal court. Stratman v. Babbitt, 1994 U.S. App. LEXIS 34354, 1994 WL 681071, at *4 (9th Cir. Dec. 5, 1994). The district court concluded that the matter was not ripe for judicial review without a formal determination on the merits of Stratman’s claims by the agency. It therefore remanded the matter to the IBLA and dismissed Stratman’s action.

Following remand, a hearing was held on Woody Island’s eligibility. The administrative law judge issued an opinion on October 13, 1999, concluding with three findings:

(1) The alleged Village did not have 25 or more Native residents on April 1, 1970, (2) The alleged Village, as of April 1, 1970, was not an established Native village and did not have an identifiable physical location evidenced by occupancy consistent with the Natives’ own cultural patterns and life-style, and (3) Less than 13 enrollees to the alleged Village used it during 1970 as a place where they actually lived for a period of time.

Three years later, the IBLA affirmed the merits of Stratman's claim. 157 I.B.L.A. 302 (2002).

Shortly thereafter, Stratman filed the instant action. In the meantime, however, Leisnoi petitioned the Secretary for review of the IBLA decision pursuant to 43 C.F.R. § 2651.2(a)(5) (providing that “[d]ecisions of the Board on village eligibility appeals are not final until personally approved by the Secretary”), and 43 C.F.R. § 4.5(a)(2) (granting the Secretary authority to “review any decision of any employee or employees of the Department . . . to reconsider a decision . . . .”).

On December 11, 2006, the Office of the DOI Solicitor issued a memorandum reviewing the 2002 decision of the IBLA. The Solicitor concluded that § 1427 of ANILCA ratified the eligibility determination of the Secretary, and thus mooted Stratman’s challenge to Leisnoi’s certification. The Solicitor first observed that § 1427 was “quite clear” in treating Leisnoi as an eligible village. To the extent that the statute was ambiguous, the Solicitor resolved the ambiguity in favor of Leisnoi in light of Congress’ desire to resolve the land entitlements of Koniag as soon as practicable. The Secretary adopted the Solicitor’s memorandum as his own decision and “disapprove[d] the decision of the IBLA.”

Following the issuance of the Secretary’s decision in late 2006, Stratman filed a third amended complaint in which he sought enforcement of the IBLA’s 2002 decision. On September 26, 2007, the district court granted the Secretary, Leisnoi, and Koniag’s (collectively, the “defendants”) motion to dismiss on the ground that § 1427 of ANILCA ratified the Secretary’s 1974 eligibility determination, rendering Stratman’s action moot. Stratman timely appealed.

STANDARD OF REVIEW

We review de novo the district court’s dismissal of a complaint under Fed. R. Civ. P. 12(b)(1). Wah Chang v. Duke Energy Trading & Mktg., LLC, 507 F.3d 1222, 1225 (9th Cir. 2007). Federal jurisdiction over this case depends on whether ANILCA § 1427 has rendered Stratman’s administrative challenge moot. We review this question of statutory interpretation de novo. See Alaska Wildlife Alliance v. Jensen, 108 F.3d 1065, 1069 (9th Cir. 1997).

ANALYSIS

“[I]f an event occurs while a case is pending on appeal that makes it impossible for the court to grant ‘any effectual relief whatever’ to a prevailing party, the appeal must be dismissed.” Church of Scientology v. United States, 506 U.S. 9, 12, 113 S. Ct. 447, 121 L. Ed. 2d 313 (1992) (quoting Mills v. Green, 159 U.S. 651, 653, 16 S. Ct. 132, 40 L. Ed. 293 (1895)). We have repeatedly recognized that the enactment of a new law that resolves the parties’ dispute during the pendency of an appeal renders the case moot. See, e.g., Consejo de Desarrollo Economico de Mexicali, A.C. v. United States, 482 F.3d 1157, 1168 (9th Cir. 2007) (interpreting relevant provisions of the Tax Relief and Health Care Act of 2006 to exempt a canal lining project from statutory environmental claims); Qwest Corp. v. City of Surprise, 434 F.3d 1176, 1181 (9th Cir. 2006). Here, the defendants contend that § 1427 of ANILCA had the effect of designating Leisnoi as an eligible village corporation and conveying land to Leisnoi, thereby ratifying the Secretary’s eligibility determination and rendering moot Stratman’s challenge. Stratman, on the other hand, contends that § 1427 is a land withdrawal and selection provision that merely identified Leisnoi as a village whose land selection might change if it satisfied the eligibility requirements of ANCSA. We agree with the defendants.

I. Congressional intent

A. Statutory language and framework

When interpreting a statute, we must first “determine whether the language at issue has a plain and unambiguous meaning with regard to the particular dispute in the case.” Texaco Inc. v. United States, 528 F.3d 703, 707 (9th Cir. 2008) (citation and quotation marks omitted). Along with the specific provisions at issue, we examine “the structure of the statute as a whole, including its object and policy.” Consejo de Desarrollo Economico, 482 F.3d at 1168 (citation and quotation marks omitted). “In viewing the statutory context, we attempt to give effect, if possible, to every clause and word of a statute . . . .” Id. (internal citation and quotation marks omitted). We therefore turn to § 1427 and other related provisions of ANILCA.

Section 1427, titled “Koniag Village and Regional Corporation lands,” falls within the portion of ANILCA devoted to the resolution of issues specific to villages and regional corporations. In support of their position, the defendants point to § 1427(a), which defines “[d]eficiency village acreage on the Alaska Peninsula” as “the aggregate number of acres of public land to which ‘Koniag deficiency Village Corporations’ are entitled, under section 14(a) of [ANCSA],” § 1427(a)(2) (emphasis added), and “Leisnoi, Incorporated” as a “Koniag deficiency village corporation . . . .” § 1427(a)(4). Section 14(a) of ANCSA, 43 U.S.C. § 1613(a), entitles eligible village corporations to a patent for surface estates. To the extent that a shortage of land exists around the village, § 11 of ANCSA, 43 U.S.C. § 1610(a)(3), requires the Secretary to withdraw deficiency acreage from the nearest unappropriated public lands of a similar character. Under ANCSA, a village logically must be deemed eligible before the problem of land deficiency can possibly arise. The fact that § 1427 identifies Leisnoi as a Koniag deficiency village corporation and further indicates that such deficiency village corporations are entitled to land under ANCSA is strong evidence of Congress’ intent to treat Leisnoi as an eligible village.

Section 1427(b) goes on to state that “[i]n full satisfaction of . . . the right of each Koniag Deficiency Village Corporation to conveyance under [ANCSA] of the surface estate of deficiency village acreage on the Alaska Peninsula . . . the Secretary of the Interior shall . . . convey . . . the surface estate of . . . public lands on Afognak Island . . . .” § 1427(b)(1) (emphasis added). Under the plain language of the statute, then, Leisnoi is entitled, § 1427(a)(2), and has the right, § 1427(b)(1), to public land under § 14(a) of ANCSA. This language inexorably leads to the conclusion that Congress intended to treat Leisnoi as an eligible village corporation under ANCSA. It would defy logic and common sense for Congress to deem Leisnoi entitled to deficiency lands without also implicitly having found that it was entitled to other lands under § 14(a) of ANCSA. It would also be illogical for Congress to convey lands to an ineligible village corporation. Further, Congress identified only one condition precedent to conveyance of land to Leisnoi: Leisnoi’s acceptance of the conveyance on Afognak Island in “full satisfaction of [its] respective entitlement to conveyances . . . on the Alaska Peninsula . . . .” § 1427(b)(4). Given that Congress did not require Leisnoi to meet any additional requirements to acquire land under ANCSA, it follows that Congress intended to treat Leisnoi as an eligible village, and granted it the right to land as such.

Stratman contends that the plain language of § 1427 incorporates the eligibility requirements of ANCSA. He argues that because there is no apparent conflict between § 1427’s land exchange and entitlement provisions and ANCSA § 11(b)(3)’s, 43 U.S.C. § 1610(b)(3), village eligibility requirements, effect can be given to both. This approach puts the cart before the horse: he says that because the statutes can be read together, that Congress must have intended his interpretation. Yet, such an intent would appear to conflict with the unqualified declaration that Leisnoi is a deficiency village corporation, and with the fact that § 1427 does not explicitly incorporate ANCSA’s eligibility requirements.

Stratman raises several other arguments in support of his position based on the overall structure of the statute. First, he points to § 1427(f), which provides that “[a]ll conveyances made by reason of this section shall be subject to the terms and conditions of [ANCSA] as if such conveyances (including patents) had been made or issued pursuant to that Act.” He notes that § 14(a) of ANCSA, 43 U.S.C. § 1613(a), provides for the issuance of a patent to village corporations “which the Secretary finds [are] qualified for land benefits under [ANCSA].” Because a conveyance under ANCSA can only be made after a finding of eligibility, he argues that § 1427(f) first requires a finding of eligibility. Unfortunately, this interpretation ignores the explicit language of § 1427(f). By its own terms, the subsection is limited to “conveyances,” not eligibility determinations. Further, the above-quoted provision in ANCSA which incorporates the Secretary’s eligibility determination is a dependent adverbial clause: the language discussing eligibility does not govern the conveyance, but only specifies when the conveyances may occur. As such, that language does not necessarily pertain to the “ma[king] or issu[ing]” of conveyances “pursuant to [ANCSA].” § 1427(f).

Stratman next argues if Congress had intended to exempt Leisnoi from meeting ANCSA’s eligibility requirements, it would have done so explicitly: Congress clearly knew how to make exceptions to ANCSA’s eligibility requirements, as it did with the seven villages which brought challenges to the Secretary’s finding of ineligibility as to those villages. See Koniag, 580 F.2d at 601 (involving challenges brought by the ineligible Koniag villages). In § 1427(e), Congress allowed those villages to “be deemed an eligible village under [ANCSA]” if it released the United States from its prior claims brought under the act. § 1427(e)(1), (2). This argument cuts both ways: on the one hand, Congress could have included clear language that deemed Leisnoi eligible despite any failure to meet the eligibility requirements; on the other, the fact that Congress did not make an exception for Leisnoi, and instead listed it as a deficiency village, implies that Congress already deemed it an eligible village.[2]

Finally, Stratman contends that § 1412, which provides that “[e]xcept as specifically provided in this Act, (i) the provisions of [ANCSA] are fully applicable to this Act, and (ii) nothing in this Act shall be construed to alter or amend any of such provisions[,]” expressly indicates that ANCSA’s provisions apply absent a specific statement to the contrary. The deviations from ANCSA in § 1427, however, are specific enough to satisfy this “specific statement” requirement: a Congressional determination that Leisnoi is a village corporation exempts Leisnoi from having to satisfy ANCSA’s eligibility requirements. Part B of Title XIV contains not only § 1427, resolving issues involving the Koniag region, but sections related to the specific needs of thirteen other regional or village corporations. See 94 Stat. 2374 (Table of Contents). The need explicitly to disclaim the requirements of ANCSA when referring to each specific transaction would be unduly burdensome, and a quick glance at the various provisions indicates that Congress did not do so in all cases. See, e.g., §§ 1431(b), (c) (providing for an exchange of land between the United States and the Arctic Slope Regional Corporation without mentioning ANCSA). Moreover, in its section-by-section analysis, the Senate Committee on Energy and Natural Resources characterized § 1412 as a general “savings clause” preserving the validity of ANCSA’s requirements. See S. Rep. No. 96-413, at 314 (1980), as reprinted in 1980 U.S.C.C.A.N. 5070, 5258. In sum, a clause that makes the terms of an entire statute applicable to another statute does not necessarily displace a provision that specifically names Leisnoi as a deficiency village.[3]

B. Purpose

The Supreme Court observed in Amoco Products Co. v. Gambell, 480 U.S. 531, 107 S. Ct. 1396, 94 L. Ed. 2d 542 (1987), that “ANILCA’s primary purpose was to complete the allocation of federal lands in the State of Alaska, a process begun with the Statehood Act in 1958 and continued in 1971 in ANCSA.” Id. at 549 (footnote omitted) (citing ANILCA § 101). Referring specifically to Title XIV, of which § 1427 is a part, the Court stated that “[t]he Act also provided means to facilitate and expedite the conveyance of federal lands within the State to . . . Alaska Natives under ANCSA.” Id. at 550. This purpose is reflected in the Senate Committee’s summary of Title XIV, which it described as designed to “simplify administration of that Act and assure that the Natives receive full benefits which the Congress intended in the original law.” 1980 U.S.C.C.A.N. 5073. Section 1427 of ANILCA calls for the exchange of deficiency lands on the Alaska Peninsula for lands on Afognak Island to take place “as soon as practicable,” and sets a deadline of 60 days for Koniag to designate village corporations entitled to share the surface estate under § 12(b) of ANCSA, 43 U.S.C. § 1611(b). See § 1427(a)(5). The desire to facilitate a rapid land allocation supports the view that Congress intended to include Leisnoi as an eligible native village corporation, rather than leave its status uncertain.

Based on the foregoing analysis, it is clear that Congress designated Leisnoi an eligible village without requiring that it satisfy the requirements for eligibility set out in ANCSA. We decline to wade into § 1427’s unhelpful legislative history to further clarify a matter of interpretation resolved on the face of the statute. See Consejo de Desarrollo Economico, 482 F.3d at 1168 (“If the plain meaning of the statute is unambiguous, that meaning is controlling and we need not examine legislative history as an aid to interpretation unless the legislative history clearly indicates that Congress meant something other than what it said.”) (citation and quotation marks omitted).[4]

II. Effect on the Secretary’s eligibility determination

Congress viewed § 1427 as a cleanup measure in which it exercised its authority in order to effectuate the purposes ANCSA, irrespective of determinations made by the Secretary. Absent a constitutional impediment to the exercise of its authority, the intent of Congress to designate Leisnoi as an eligible village corporation and convey land to it as such must be given effect. The Property Clause of the Constitution gives Congress the “Power to dispose of and make all needful Rules and Regulations respecting the Territory or other Property belonging to the United States[.]” U.S. Const. art IV, § 3, cl. 2. The Supreme Court has “repeatedly observed that the power over the public land thus entrusted to Congress is without limitations.” Kleppe v. New Mexico, 426 U.S. 529, 539, 96 S. Ct. 2285, 49 L. Ed. 2d 34 (1976) (citation, quotation marks, and alterations omitted). And we have recognized Congress’ power to “‘deal with its lands precisely as an ordinary individual may deal with his . . . property. It may sell or withhold them from sale.'” United States v. Gardner, 107 F.3d 1314, 1318 (9th Cir. 1997) (quoting Light v. United States, 220 U.S. 523, 536, 31 S. Ct. 485, 55 L. Ed. 570 (1911)). Stratman does not contend, nor could he, that Congress lacked the power to patent lands to Leisnoi, or to designate Leisnoi as an eligible village if it so desired. Therefore, Congress’ intent to treat Leisnoi as an eligible village corporation renders moot Stratman’s challenge to Leisnoi’s certification on the ground that it failed to meet ANCSA’s requirements.

In United States v. Alaska, 521 U.S. 1, 117 S. Ct. 1888, 138 L. Ed. 2d 231 (1997), the United States and Alaska disputed ownership over certain submerged lands seaward of the low water line along the Arctic Coast within two federal reservations. Id. at 4-5. Under the Submerged Lands Act, enacted in 1953, and the Alaska Statehood Act, enacted in 1958, as well as the equal footing doctrine, Alaska was entitled to submerged lands extending three miles seaward from the coastline of the state. Id. at 5-6. One of the particular issues in dispute was whether Congress exercised its Property Clause power to prevent the lands at issue from passing to Alaska on statehood. Id. at 33. In 1923, the President, through an Executive Order, clearly intended to include the submerged lands at issue in the Federal reserve. Id. at 40. Alaska challenged the President’s authority to include those submerged lands. Id. at 43. It argued that the source of executive authority, the Pickett Act, only granted the President the authority to select surface lands for the reserve. Id. at 44. The Court stated that even assuming that the President did not have authority under the Pickett Act to reserve the lands for the federal government, “Congress ratified the terms of the 1923 Executive Order in § 11(b) of the Statehood Act.” Id. It held that the Executive Order “placed Congress on notice that the President had construed his reservation authority to extend to submerged lands and had exercised that authority to set aside . . . submerged lands in the Reserve . . .” Id. at 45. “Accordingly, Congress ratified the inclusion of submerged lands within the Reserve, whether or not it had intended the President’s reservation authority under the Pickett Act to extend to such lands.” Id.

The mode of analysis in Alaska applies in this case. Congress clearly had the authority to designate Leisnoi an eligible village and to confer upon Leisnoi public lands. Its awareness of the Secretary’s 1974 eligibility determination in favor of Leisnoi is established by the fact that Leisnoi was named in § 1427. See § 1427(a)(4). Regardless of whether the Secretary correctly determined that Leisnoi was eligible under ANCSA, Congress referred to the eligibility determination when it included Leisnoi as a “deficiency village corporation” endowed with the right “to conveyance under [ANCSA] of the surface estate of deficiency village acreage on the Alaska Peninsula[.]” §§ 1427(a)(4), (b)(1)(B). As in Alaska, the subsequent action of Congress makes the propriety of the underlying decision irrelevant, even if the underlying decision might have transgressed the intent of Congress. We have previously treated as final land conveyances to regional and village corporations under ANTLCA:

Cube Cove was conveyed to Shee Atika and Sealaska by section 506 of ANILCA, . . . which provides in relevant part:

(c)(1) In satisfaction of the rights of the Natives of Sitka, . . . the Secretary of the Interior, upon passage of this Act, shall convey subject to valid existing rights . . . the surface estate in [Cube Cove].
. . .

We refuse to attribute to Congress the purpose [asserted by plaintiffs] to place . . . restrictions on land-use absent a clear expression of intent.

City of Angoon v. Hodel, 803 F.2d 1016, 1022-23 (9th Cir. 1986).

Further, whether Congress conveyed land to Leisnoi under the allegedly mistaken assumption that Leisnoi was an eligible village is irrelevant. “While it is essential . . . [that] government agencies comply with the law, . . . . [w]hether Congress was acting under a misapprehension of fact or law is irrelevant once legislation has been enacted.” Mt. Graham Red Squirrel v. Madigan, 954 F.2d 1441, 1461 (9th Cir. 1992). As long as the legislation is valid, it is not the duty of the courts to revise it:

If Congress enacted into law something different from what it intended, then it should amend the statute to conform it to its intent. ‘It is beyond our province to rescue Congress from its drafting errors, and to provide for what we might think . . . is the preferred result.’ This allows both of our branches to adhere to our respected, and respective, constitutional roles. In the meantime, we must determine intent from the statute before us.

Lamie v. U.S. Trustee, 540 U.S. 526, 542, 124 S. Ct. 1023, 157 L. Ed. 2d 1024 (2004) (internal citation and quotation marks omitted). Congress treated Leisnoi as an eligible village, and conferred land rights to Leisnoi. By doing so, it ratified the Secretary’s eligibility decision.[5]

CONCLUSION

We are not unmindful of the failure of our legal system to accomplish “rapidly, with certainty, [and] without litigation,” 43 U.S.C. § 1601(b), a resolution of the disputed claims in this case. Nearly thirty years have now passed since the enactment of ANILCA and it is time to bring this litigation to an end. We hold that § 1427 ratified the eligibility determination that Stratman seeks to challenge, leaving us unable to grant Stratman’s requested relief under ANCSA regardless of the merits of his claims. Because we lack jurisdiction to hear moot claims, see Feldman v. Bomar, 518 F.3d 637, 642 (9th Cir. 2008), we dismiss this appeal. Id. at 644. Each party shall bear his or its own costs on appeal.

DISMISSED.