Conitz vs. Teck Alaska Incorporated

ORDER RE CROSS-MOTIONS FOR SUMMARY JUDGMENT

I. INTRODUCTION

Before the Court are Plaintiff Gregg Conitz and Defendant Teck Alaska Incorporated (“Teck”) with what amount to cross-motions for summary judgment. At Docket 49, Conitz requests a permanent injunction against Teck’s shareholder employment preference on the grounds that it violates Title VII of the Civil Rights Act. The issuance of such an injunction would require this Court to essentially dispose of all the legal issues presented in this case, so the Court will treat it as a motion for summary judgment. Teck files its own motion for summary judgment at Docket 57, arguing that the shareholder preference does not violate Title VII and that, in any event, Conitz has no standing to make a Title VII claim because he was not qualified for the promotion which he sought in 2008.

Having reviewed the voluminous briefs submitted by the parties, the Court concludes that oral argument is neither necessary nor warranted.

II. BACKGROUND

Conitz is a Teck employee working at the Red Dog mine, which Teck operates in cooperation with co-Defendant NANA Regional Corporation (“NANA”), an Alaska Native corporation created under the Alaska Native Claims Settlement Act of 1971 (ANCSA). Conitz claims that he has been continually passed over for promotion because of Teck’s policy of favoring NANA shareholders in hiring. According to Conitz, the policy is racially discriminatory because the vast majority of NANA shareholders are Alaska Natives. According to the Shareholder Records Manager for NANA, out of 12,264 total shareholders, there are 69 who are not Alaska Natives who have obtained shares through inheritance.[1]

This suit is Conitz’s second attempt to invalidate Teck’s shareholder employment preference. In Conitz v. Teck Cominco Alaska Inc., 4:06-cv-00015-RRB (“Conitz I”), this Court granted summary judgment to Teck on two independent grounds. The Court held that Conitz could not claim discrimination in hiring because he was not qualified for the positions for which he had applied, and because Teck’s employment preference for shareholders of the NANA Regional Corporation (“NANA”) was not a racial preference.[2] The Ninth Circuit affirmed the Court’s decision with regard to Conitz’s qualifications, but did not address whether shareholder preference constitutes racial discrimination.[3]

In this case, Conitz again alleges that he was discriminated against on July 25, 2008, when he was passed over for a promotion to the position of Mine Operations Supervisor in favor of Charles Barger, an Alaska Native/NANA Shareholder.[4] Conitz claims that he was more qualified for the management position than was Barger, an assertion which his supervisors at Teck strenuously deny.

III. RULE OF DECISION

Summary judgment is appropriate if no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law.[5] The moving party always bears the burden of demonstrating the absence of a material issue of fact.[6] The moving party need not present evidence; it need only point out the lack of any genuine dispute as to material fact.[7] Once the moving party meets this burden, the non-moving party must set forth evidence of specific facts showing the existence of a genuine issue of material fact.[8] All evidence presented by the non-movant must be believed for purposes of summary judgment, and all justifiable inferences must be drawn in favor of the non-movant.[9]

IV. DISCUSSION

To establish a prima facie case for racial discrimination under Title VII, “the complainant must show that (1) the complainant belongs to a protected class; (2) the complainant applied for and was qualified for a job for which the employer was seeking applications; (3) the complainant was rejected despite the complainant’s qualifications; and (4) after the complainant’s rejection, the position remained open and the employer continued seeking applications from persons with the complainant’s qualifications.”[10] “[I]f an employer has not left the disputed position open and has instead hired someone else, the fourth element of the prima facie case is the hiring of an individual not within the same protected class as the complainant.”[11]

Conitz’s claims are fairly simple. Conitz argues that the shareholder preference amounts to racial discrimination because nearly all of NANA’s shareholders are Alaska Natives and he is Caucasian. Teck puts forth a number of arguments as to why Conitz has failed to make a prima facie case for racial discrimination. The Court will first discuss Teck’s arguments with regard to the legality of the shareholder preference and then address Conitz’s qualifications for the specific promotion which is the basis of this litigation.

A. The Shareholder Preference Is Not Racially Discriminatory

In Conitz I, this Court held that the shareholder preference “is based on the permissible distinction of shareholder status rather than race.”[12] The Court cited Morton v. Mancari, 417 U.S. 535 (1974), in which the Supreme Court ruled that a Bureau of Indian Affairs hiring preference for members of Indian tribes was “political rather than racial in nature.”[13]

The Court notes that Mancari is not a perfect analogue for this case, since it involved governmental action, whereas this case concerns the actions of a private employer. However, Mancari was cited for the proposition that distinctions based on non-racial categories do not trigger Title VII liability simply because they are related to national ancestry.[14]

As in Conitz I, the Court must decide whether Teck’s shareholder preference is racially discriminatory. There is no question that if NANA were Conitz’s employer, it would be exempt from Title VII liability under the exemption provided in 43 U.S.C. § 1626(g). According to the Mancari decision, it would also not be racially discriminatory for Teck to give preference to members of all Indian tribes. However, the Ninth Circuit has held that employment preferences for members of a particular tribe are racially discriminatory when adopted by a non-tribal employer.[15] This is true even where, as in this case, the private employer has instituted the hiring preference as part of an agreement permitting it to operate on tribal lands.[16]

Therefore, if Teck’s employment preference were explicitly for Alaska Natives, or Alaska Natives of NANA regional origin, it would violate Title VII. Teck vehemently denies that any such preference exists; it insists that the preference is for NANA shareholders, who are overwhelmingly though not exclusively Alaska Natives.[17]

Teck’s shareholder preference policy is not written down anywhere, although it is memorialized in the operating agreement between Teck and NANA. The agreement requires that “as many as possible of the employees required by” Teck at the Red Dog Mine “shall be Natives of the NANA Region.”[18] Although “Natives of the NANA Region” sounds like a racial category, the agreement explicitly provides that “‘Natives of the NANA Region’ means the stockholders of NANA whose stock carries voting rights, and the descendants and spouses of such stockholders.”[19] By its own terms, then, the shareholder preference policy is not racial in character, although both parties have tended to confuse rather than clarify the issue by using the terms “NANA shareholder” and “Natives of the NANA Region” interchangeably.[20]

Conitz also argues that the shareholder preference, although not explicitly racial, is a proxy for racial discrimination. He cites Bonilla v. Oakland Scavenger Co., 697 F.2d 1297 (9th Cir. 1982), in which the Ninth Circuit held that a shareholder hiring preference was a proxy for racial discrimination where the employer “(1) [assigned] the better jobs with higher pay and more guaranteed hours to the shareholder-employees, who were exclusively of Italian ancestry, and (2) [limited] share ownership to persons who were of Italian ancestry and were either members of the family or close friends of a current shareholder.”[21]

The Bonilla precedent is inapplicable in this case for two reasons. First, several of the beneficiaries of the discrimination in Bonilla were non-shareholders of Italian ancestry. Conitz has not alleged that any Alaska Natives other than NANA shareholders have benefitted from Teck’s shareholder preference policy.

Second, much of the discrimination which took place in Bonilla was done by restricting the selection of shareholders to those of Italian ancestry. The Ninth Circuit held that in those limited circumstances the process of selecting shareholders was subject to Title VII scrutiny.[22] NANA’s shareholder selection, however, is prescribed by an act of Congress, namely ANCSA. It would be improper for this Court to find that NANA’s shareholder selection violates Title VII when it is Congress that has defined the shareholder class. Legislative enactments should be read in harmony with one another, whenever possible.[23] The Court simply cannot conclude that Congress, in creating the Native Corporations, intended them to have less of an ability to negotiate contracts favorable to their shareholders than would any other corporation.

The shareholder preference is not a racial preference, and Conitz has not shown that it is applied as a proxy for racial discrimination. Therefore, the preference is not a racially discriminatory policy prohibited by the Civil Rights Act. The Court need not address Teck’s argument that the Red Dog Mine is a joint venture between NANA and Teck, and therefore exempt from Title VII under the native corporation exemption found in 43 U.S.C. § 1626(g).

B. Conitz Has Failed to Show That He Was Qualified For the Promotion

In Conitz I, the Court ruled that Conitz had failed to make a prima facie case of discrimination because he had not supplied evidence that he was as qualified for a promotion as those individuals who were promoted. His case is similarly deficient in this litigation. In arguing that he was more qualified for the 2008 promotion than Barger, Conitz primarily relies upon his nineteen years of experience at the mine, versus eight years for Barger.[24] Besides his years of experience, Conitz presents no evidence of his qualifications other than his own affidavit, in which he asserts: “Mr. Barger was far less qualified for the position than I. Had Mr. Barger not been assigned to Acting Supervising duty instead of me, Mr. Barger would not have had any supervisory experience.”[25]

Of course, as this statement indicates, Barger had been previously assigned as an Acting Supervisor, and therefore did have supervisory experience at the time of his 2008 promotion. Conitz also recounts that he discussed the decision to promote Barger with his supervisor Larry Hanna, who told him Barger was “doing a better job” than Conitz, but “would never give me a specific reason as to why he thought so.”[26]

The overwhelming testimony of Conitz’s superiors contradicts his characterization of his qualifications. Robert Scott, who was general manager of the Red Dog Mine from 2003-2005, testifies that “Mr. Conitz’s job performance, particularly with respect to safety, made him unsuited to serve as an example for others to follow, which is an integral component of any supervisory position at Teck[.]”[27] Larry Hanna, who made the decision to promote Barger over Conitz in 2008, says,

I selected Mr. Barger to fill a Shift Supervisor position because his leadership skills were superior to those of Mr. Conitz and each of the other candidates, because he was most adept in making the best use of people, and because he had demonstrated superior management skills.[28]

Hanna asserts that Barger was “better qualified than any other applicant.” Of Conitz, Hanna testifies as follows:

Mr. Conitz is an adequate operator who has long showed mediocre performance in his job. […] His attitude is poor. He lacks leadership abilities, does not demonstrate initiative, and is not a team player. […] [H]e has limited abilities to perform tasks that require finesse as an operator. Historically, his safety record has been problematic. At every level, Mr. Conitz has failed to demonstrate that he has the skills that Teck seeks in its supervisors and managers.[29]

This opinion is echoed by Jim Somers, Superintendent of Human Resources at Teck, who calls Conitz a “mediocre employee” who has “typically been ranked at or near the bottom of the applicant pool.”[30]

The Ninth Circuit has repeatedly refused to find a “genuine issue” where the only evidence presented is “uncorroborated and self-serving” testimony.[31] In this case, the only evidence to support Conitz’s qualification for the supervisor position is his own affidavit. While the Court does not disregard Conitz’s affidavit entirely, it is at odds with the testimony of all his superiors at the Red Dog Mine. It is an “uncorroborated and self-serving affidavit” which is insufficient to defeat a motion for summary judgment where substantial contrary evidence has been submitted. In light of the paucity of evidence that Conitz was qualified for a promotion, and the abundance of evidence to the contrary, the Court holds that Conitz has failed to make out a prima facie case for racial discrimination under Title VII.

V. CONCLUSION

Teck’s employment preference for NANA shareholders is not a racial distinction and therefore does not violate either the Civil Rights Act or any other provisions of federal or state law cited by Conitz in his complaint. Furthermore, Conitz has failed to make a prima facie case of discrimination because he was not qualified for the promotion which he sought and for which Charles Barger was accepted. For the foregoing reasons, Teck’s Motion for Summary Judgment at Docket 57 is GRANTED and Conitz’s Motion for a Permanent Injunction at Docket 49 is DENIED. The motions to strike at Dockets 69 and 91 are DENIED AS MOOT because the evidence sought to be excluded had no effect on the Court’s decision. Teck’s Motion to Change Venue at Docket 28 is DENIED AS MOOT.

IT IS SO ORDERED.
ENTERED this 20th day of January, 2010.
/s/ RALPH R. BEISTLINE
United States District Judge

Williams v. Bristol Bay Native Corporation

I. Background

The parties agree to the facts stated herein, and agree to the question of which statute of limitations applies to this case is ripe for decision on summary judgement.

Lisa Williams alleges that 37 shares of BBNC stock were wrongfully transferred to Defendants Jessie Elizabeth Williams (“Jessie”) and Cody Francis Williams (“Cody”) after her husband, Earl A. Williams (“Earl”), passed away in February, 2014.[1] Earl drafted and signed a handwritten will in 2013, leaving all of his property to Lisa Williams.[2] Earl registered the 2013 will with the Anchorage Superior Court on May 9, 2013.[3] On February 17, 2014, he executed another handwritten will, which purported to supersede and revoke the 2013 will, and to leave all of his worldly possessions to his children, Jessie and Cody Williams.[4] Earl’s 2013 will admitted to probate, and Lisa Williams was appointed as Personal Representative.[5]

Initially BBNC was aware of the 2013 will only, and tentatively determined that Lisa Williams would inherit Earl’s 37 BBNC shares.[6] On February 18, 2015, BBNC sent transfer notices to Lisa Williams, Jessie, and Cody, informing them that BBNC intended to transfer the shares to Lisa Williams.[7] On March 10, 2015, BBNC was provided with the 2014 will.[8] On April 27, 2015, BBNC sent Williams another notice, informing her that BBNC re-determined the distribution of ANCSA stock because it received a will that supersedes the will on file, and that BBNC intended to distribute the shares to Jessie and Cody within 30 days from the date of the letter.[9] The letter also advised Lisa Williams that she may bring an action in Superior Court under AS 13.16.705 if she disagrees with BBNC’s determination. On May 29, 2015, BBNC transferred 37 shares of stock owned by Earl to Jessie and Cody Williams, along with all distributions and dividends BBNC had held in trust since Earl’s death.[10]

On April 23, 2018, over two years later, Lisa Williams filed the Complaint.[11] She asserts that BBNC should have conveyed the shares of stock to her as the sole heir and beneficiary under Earl’s will. She seeks an order requiring BBNC to “(a) cancel the 37 share[s] of stock that were transferred to Jessie and Cody, (b) issue the 37 shares of stock to Lisa, and (c) pay and distribute to Lisa all dividends and distributions from or on account of the 37 shares of stock.”[12]

II. Standard

Summary judgement is appropriate when there is no genuine dispute as to any material fact and the moving party is entitled to judgement as a matter of law.[13] “Only in the unusual circumstances in which ‘there exist uncontroverted facts that determine when a reasonable person should have been on inquiry notice’ can a court properly resolve the question [of whether the statute of limitations has run] as a matter of law.”[14] In this case, the parties agree that there is no genuine dispute as to any material fact. The Court is mindful that the defense of statute of limitations is “generally disfavored by the courts” and that “doubts as to which of two statutes is applicable in a given case should be resolved in favor of applying the statute containing the longer limitations period.”[15]

III. Discussion

The question before the Court is whether the claim is barred by the statute of limitations. Williams did not file the Complaint until almost three years after the May 29, 2015 transfer of the shares to Jessie and Cody. Specifically at issue is whether (1) Williams’ claim sounds in contract, in which case the three-year statute of limitations under AS 09.10.053 applies; (2) the two-year statute of limitations applies under AS 09.10.070(a)(s), (3), or (5); or (3) the ten-year statute of limitations under AS 09.10.100 applies.

AS 09.10.053, Contract actions to be brought in three years, provides that a person may not bring an action upon a contract or liability, express or implied, unless that action is commenced within three years.[16] AS 09.10.070, Actions for torts, for injury to personal property, for certain statutory liabilities, and against peace officers and coroners to be brought in two years, provides as follows in relevant part:

(a) Except as otherwise provided by law, a person may not bring an action…(2) for…injury to the rights of another not arising on contract and not specifically provided otherwise; (3) for taking, detaining, or injuring personal property, including an action for its specific recovery…or (5) upon a liability created by statute, other than a penalty or forfeiture; unless the action is commenced within two years of the accrual of the cause of action.[17]

AS 09.10.100, Other actions in 10 years, provides "[a]n action for a cause not otherwise provided for may be commenced within 10 years after the cause of action has accrued."[18]

A. The Three-Year Contract Statute of Limitations Does Not Apply to Williams’ Claim

BBNC asserts that Williams’ allegations resemble a tort action, and do not sound in contract.[19] Williams contends that there is an implied contractual relationship between Williams and BBNC under AS 13.16.705 and that the three-year contract statute of limitations in AS 09.10.053 should apply.[20] She argues that “[a]n action against the directors of a corporation for breach of their duties is an action for implied contract.”[21] Both parties agree that a shareholder derivative suit is a contract action.[22] However, the parties disagree as to whether a suit contesting ownership of stock by someone who has never been a shareholder is a contract action. BBNC claims it is not. BBNC asserts that because Williams is not a shareholder, and does not have any colorable contractual relationship with BBNC or its directors, she lacks standing to allege any direct or derivative claim against BBNC.[23] Moreover, BBNC claims that under either an express or implied theory of contract, none of the wills could have been considered to constitute an offer, acceptance, or consideration with respect to BBNC.[24]

The “‘gravamen’ of the plaintiff’s claim determines whether the ‘contract’ or tort’ statute of limitations applies.”[25] The Court considers not only whether a contractual relationship exists, but also whether the nature of the action and the injury sounds in contract.[26] Here, the action does not sound in contract. There is no implied or express contract between Williams and BBNC, or Williams and Earl, which would give rise to a plausible contract claim against BBNC. There is no basis for the Court to interpret Earl’s 2013 will as creating a contract between Williams and Earl, or between BBNC and Earl, with Williams as a third party beneficiary.

AS 13.16.705 does not create a contractual relationship between Williams and BBNC.[27] The Court is unaware of any authority indicating that a statutory obligation creates a contractual obligation. Williams filed this action to resolve a dispute regarding who is entitled to Earl’s shares of stock. Williams did not file an action for breach of contract, breach of fiduciary duties, or a shareholder derivative suit. Instead, she seeks an order requiring BBNC to cancel the transfer of shares to Jessie and Cody and to issue the shares of stock to her. She does not allege damages.

While Williams completed a Potential Shareholder Information Form, she is not a shareholder of BBNC. There is no other relationship between Williams and BBNC indicating that BBNC owes a duty to her. The facts of this case are distinguishable from those where the action arises out of a professional service relationship. In Lee Houston & Assocs., Ltd. v. Racine, the Alaska Supreme Court relied in part on the “or liability” language of the contract statute of limitations and concluded that the longer contract statute of limitations applied to claims of negligence, misrepresentation, and fraud arising out of a professional service relationship.[28] The Alaska Supreme Court concluded that the contract statute of limitations “must be interpreted as applying to a category of actions broader than those based only on contract principles.”[29] Both the contract and the tort statute of limitations refer to actions brought upon a liability. As discussed below, to the extent that Williams relies on any liability that BBNC has, the Court concludes that it is a liability created by statute that would fall within AS 09.10.070(a)(5) instead of AS 09.10.053.

Because there is no contractual relationship or other duty arising from a contract, the Court concludes that Williams’ claim against BBNC does not sound in contract for the purpose of AS 09.10.053, and the three-year statute of limitations does not apply to her claim.

B. The Two-Year Statute of Limitations for Injury To the Rights of Another Not Arising on Contract Applies to Williams’ Claim

A two-year statute of limitations applies to an action for “injury to the rights of another not arising on contract.”[30] Under AS 13.16.705, “[i]n case of dispute as to the person entitled to receive [Native corporation] stock, a person claiming ownership may bring an independent action in the superior court.”[31] There is no specific statute of limitations referenced in AS 13.16.705. In this case, Williams asserts her right to ownership of BBNC shares of stock and the concomitant rights to the benefits of stock ownership, such as distributions and voting rights. The Court concludes that Williams’ claim for the recovery of ownership of BBNC shares is a claim for injury to the rights of another not arising on contract.

The cause of action in this case is similar to a cause for tortious interference with contract. Williams essentially alleges that BBNC interfered with her “contract” with Earl to gift his shares to her upon his death, and that BBNC interfered with that arrangement by determining ownership of the shares and transferring them to Jessie and Cody instead of her. Williams now asks the Court to reverse BBNC’s wrongful transfer of the shares, and return them to Williams, the rightful owner.

In Law Offices of Steven D. Smith, P.C. v. Borg-Warner Sec. Corp., the Alaska Supreme Court held that economic losses arising from the cancellation of a contingency fee contract, causes by and claimed against a third party, constituted an injury to the rights of another not arising in contract, and therefore subject to the two-year statute of limitations in AS 09.10.070.[32] The economic loss arising from a third-party’s interference with a contingency fee agreement is analogous to Williams’ request for the return of shares arising from BBNC’s interference with Earl’s 2013 will which bequeathed the shares to her.

As discussed below, the Court concludes that the shares of stock are intangible property. To the extent that Williams seeks to assert her rights to the shares, this is an action to recover an intangible property right. Such an action sounds in tort.[33] Williams’ claim for the return or transfer of these shares necessarily seeks a ruling that she has a right to the shares. Accordingly, it is appropriate to consider her claim as one for the injury to the rights of another. Moreover, it is consistent and reasonable to apply a two-year statute of limitations to claims for injury to both intangible and tangible personal property.[34] It would defy reason to apply a two-year statute of limitations to claims for taking or injuring tangible personal property and a ten-year statute of limitations for taking or injuring intangible personal property.

Williams’ claim is a claim for injury to the rights of another, not arising on contract. Because the Court concludes that Williams’ claim is one for injury to the rights of another not arising on contract, the two-year statute of limitations applies to her claim.

C. The Two-Year Statute of Limitations for Taking, Detaining, or Injuring Personal Property Does Not Apply to Williams’ Claim

BBNC argues that AS 09.10.070(a)(3) applies because the BBNC shares are “personal property.”[35] Williams argues that the shares are not personal property because the Alaska Supreme Court has held that “personal property” is “tangible property,” and shares are not tangible.[36]

In Kodiak Elec. Ass’n Inc. v. DeLaval Turbine, Inc., the Alaska Supreme Court concluded that the phrase “injuring personal property” incorporates actions for injury to tangible property, but declined to define “the exact parameters of the types of actions encompassed within ‘injuring personal property.'”[37] In Law Offices of Steven D. Smith, the Alaska Supreme Court rejected an argument that “personal property” includes economic loss, and reiterated that personal property refers to tangible property.[38]

While it is possible that physical stock certificates may be considered tangible personal property, shares of stock are intangible.[39] Black’s Law Dictionary defines intangible property as “Property that lacks a physical existence. Examples include stock options and business goodwill.”[40] Tangible personal property is defined as “[c]orporeal personal property of any kind; personal property that can be seen, weighed, measured, felt, touched, or in any other way perceived by the senses, examples being furniture, cooking utensils, and books.”[41] BBNC shares cannot be seen, weighed, felt, or perceived by the senses.

Black’s Law Dictionary defines “personal property” as [a]ny movable or intangible thing that is subject to ownership and not classified as real property.”[42] But given the Alaska Supreme Court’s interpretation that “personal property” refers to “tangible property,” Williams’ action to recover BBNC shares is not “taking, detaining, or injuring personal property” under AS 09.10.070(a)(3). Although shares of stock are intangible, they do represent rights that can be injured and wrongfully interfered with, as described above. Moreover, the statutory scheme established for the inheritance of Native corporation stock parallels the procedure for the transfer of personal property, providing a right to bring an action to challenge such transfer.[43]

D. In the Alternative, the Two-Year Statute of Limitations for an Action upon a Liability Created by Statute Applies to Williams’ claim

The Court concludes above that Williams’ action is one for the recovery of intangible personal property, seeking an order requiring BBNC to cancel the shares of stock that were wrongfully transferred to Jessie and Cody and to issue the shares of stock to her, and pay and distribute to her all dividends and distributions from or on account of the shares of stock. As set forth above, the Court concludes the action is one for injury to the rights of another not arising on contract. However, in the alternative, the Court concludes that this action is brought upon a liability created by statute.

BBNC argues that, because the Alaska Native Claims Settlement Act mandates BBNC stock descend by will or intestate,[44] and AS 13.16.705 requires BBNC to determine the person entitled to the stock, it is a “liability created by statute” under AS 09.10.070(a)(5). BBNC also points out that its determination can be disputed in Superior Court.[45]

Black’s Law Dictionary defines “liability” as “[t]he quality, state, or condition of being legally obligated or accountable; legal responsibility to another or to society, enforceable by civil remedy or criminal punishment.”[46] The Alaska Supreme Court has interpreted “liability created by statute” to include suits for monetary liabilities created by statute, including tax refunds, strict liability for the release of hazardous substances, obligations of employers to pay due compensation upon termination, obligations to compensate for employment discrimination, and statutory liens.[47] The Alaska Supreme Court has also indicated that a “liability created by statute” must explicitly supersede an existing common law remedy for the statute of limitations for the common law remedy to not apply.[48] Other courts have interpreted similar language to mean a liability created by statute that did not otherwise exist as common law.[49]

AS 13.16.705 places an obligation on Native corporations to make the determination of the person entitled to stock in the corporation. It explicitly provides that settlement common stock or other inalienable stock in a Native corporation is not subject to probate. The statute explicitly authorizes an independent action to be filed in the Superior Court when there is a dispute as to the person entitled to receive the stock. The Court concludes that the statutory framework regarding the inheritance of Native corporation stock explicitly supersedes the common law remedy of handling such disputes in the context of a probate matter. Instead, the liability is placed upon the Native corporation per AS 13.16.705.

Because BBNC’s duty to make a determination of the person entitled to the stock, and the ability to challenge BBNC’s decision, exists only by virtue of AS 13.16.705(a), the Court concludes that Williams’ action is “upon a liability created by statute.”

E. The Ten-Year Statute of Limitations for a Cause Not Otherwise Provided For Does Not Apply to Williams’ Claim

Williams argues that if the contract statute of limitations does not apply, then the catch-all ten-year statute of limitations for AS 09.10.100 should apply.[50] BBNC argues that the two-year statute of limitations for AS 09.10.070(a) applies, and that the legislature would never have intended the ten-year statute of limitations to apply to Native corporation share ownership determinations.[51] Because the Court concludes that AS 09.10.070(a)(2) or, in the alternative, AS 09.10.070(a)(5) applies, the ten-year statute of limitations for other actions does not apply here.

IV. Conclusion

The parties agree that there is no dispute of material fact regarding when the cause of action accrued. The Court concludes that the two-year statute of limitations applies to this case and bars Williams’ claims. BBNC’s Motion for Summary Judgment is granted. Plaintiff’s Complaint is hereby dismissed.

IT IS SO ORDERED this 24th day of September 2018, at Anchorage, Alaska.

Pederson v. Arctic Slope Regional Corporation 2022

I. INTRODUCTION

A corporate shareholder alleged the corporation violated his statutory right to inspect certain records and documents. The superior court found that the shareholder did not assert a proper purpose in his request. The shareholder appeals, arguing the superior court erred by finding his inspection request stated an improper purpose, sanctioning him for failing to appear for his deposition, and violating his rights to due process and equal protection by being biased against him. We reverse the superior court’s order finding that the shareholder did not have a proper purpose when he requested the information at issue from the corporation. But we affirm the superior court’s discovery sanctions.

II. FACTS AND PROCEEDINGS

A. Facts

This appeal arises out of a longstanding dispute[1] between Rodney Pederson and the Arctic Slope Regional Corporation (ASRC).[2] Pederson is an original shareholder of ASRC, possessing 100 Class A Shares.[3] He was employed as in-house counsel to ASRV, and later as an executive for one of its subsidiaries, until the employment relationship soured.[4] Pederson has since sued ASRC and sought election to its board.[5]

In June 2009 Pederson sent a letter seeking to exercise his shareholder right to inspect ASRC’s “books, records of account and minutes” under AS 10.06.430(b).[6] The letter enclosed three separate requests for information relating to (1) an alleged purchase of a minority interest in an ASRC subsidiary and potential transfers of that interest to executives, (2) the executive retirement plan, and (3) the process for setting executive compensation. In the letter Pederson explained that his goal was to use the information to create “an educational website recommending needed updates to the ASRC articles and/or bylaws.” Pederson stressed that he wanted to “ensure any information included is true and accurate, and not false or misleading.”

Pederson also accused some executives of putting their own interests before shareholders. He described his belief that officer and executive compensation should be reviewed by shareholders “in light of recent dramatic increases in officer and executive compensation packages, and in my opinion, the transfer of corporate assets to executives…Someone has to step-up [sic] and do something to…place[] limits on management’s ability to enrich themselves…at the expense of the Shareholders.” Tying his concerns to the requested information, he wrote:

Regarding the request for information on officer and executive compensation, what I am interested in is the influence that management Board members have in approving their own compensation, if any, and the Presidents’ ability to determine or influence the compensation of fellow management Board members who elect them, if any. Again, I certainly do not want to mischaracterize the process or mislead the Shareholders about the…topics, nor do I want to make statements that are not true and accurate.

In addition to the generalized statement of purpose in his letter, Pederson included individualized statements of purpose for each request for information.[7] First, Pederson sought information relating to the alleged transfer of ASRC subsidiary shares to its executives for the purpose of soliciting shareholder signatures to amend ASRC’s procedures surrounding executive compensation. Second, Pederson sought information relating to the executive retirement plan to solicit shareholder signatures to amend bylaws to prevent board members from also serving as compensated corporate officers. Third, Pederson sought information relating to executive compensation for the past five fiscal years for the same purpose as his second request.

After a few rounds of informal negotiation, Pederson and ASRC could not agree on the scope of Pederson’s inspection right and whether ASRC could demand a confidentiality agreement. Unsatisfied with ASRC’s partial disclosures, Pederson filed suit under AS 10.06.430(c), which provides a cause of action for an alleged violation of a shareholder’s right to inspection.[8]

B. Proceedings

Pederson’s complaint alleged that ASRC had denied his shareholder inspection rights by refusing to comply with his written demand stating a proper purpose. He sought a money judgment for statutory and punitive damages along with an order compelling production of the materials he requested. ASRC denied any wrongdoing under AS 10.06.430(b) and denied that Pederson had cited a proper purpose in his requests.

When both parties moved for summary judgment in February and March of 2010, however, ASRC stipulated that “[f]or purposes of summary judgment cross-motions, ASRC does not dispute that, in his correspondence, Pederson stated legally proper purposes for his requests.” Thus, the issue on summary judgment, and later at trial, was whether ASRC’s partial disclosures complied with its statutory obligation to disclose “books and records of account, minutes, and record of shareholders.”[9] Following a bench trial the superior court found that ASRC had supplied Pederson with all the information to which he was entitled under AS 10.06.430. Pederson appealed.

We reversed.[10] Relevant to this appeal, we held that a shareholder’s right to inspect “books and records of account” includes, among other things, records of individual executive compensation and transfers of corporate assets or interests to executives.[11] We also noted that while ASRC had not disputed Pederson’s proper purpose on appeal, regulations[12] governing the administration of Alaska Native corporations may “provide him with an additional proper purpose for inspection not available in the same way to shareholders of other corporations.”[13] We remanded the matter to the superior court for further proceedings consistent with our decision.[14]

On remand Pederson argued that he was entitled to a judgment that ASRC had not complied with AS 10.06.430. The superior court denied his motion and allowed ASRC to provide additional documents as specified in Pederson I. Pederson filed several additional summary judgement motions again arguing that ASRC was liable to him as provided by AS 10.06.430(c) for its initial denial of his request for information. The superior court denied the motions, reasoning that Pederson I announced new law and therefore ASRC had not violated Pederson’s inspection rights at the time it denied his request. Pederson petitioned for our review. We summarily reversed the superior court on the narrow ground that the Pederson I “decision reflect[ed] the existing and applicable law [at the time of his request]. The superior court [was] directed to reevaluate Pederson’s summary judgment motion(s) with the correct legal framework in mind.”[15]

On second remand, the superior court initially indicated that it was “looking very seriously at granting [Pederson’s motion for] summary judgment, based on the Supreme Court.” But the court ultimately permitted ASRC to argue for the first time that Pederson did not have a proper purpose for requesting the information. Pederson filed another motion for summary judgment contesting the superior court’s order reopening the proper purpose issue. The superior court treated it as a motion for reconsideration and denied it. Later, the superior court issued an order that (1) ASRC had not waived its proper purpose defense; (2) the shareholder has the burden of proving a proper purpose; and (3) the proper purpose defense is not an affirmative one. The court then ordered discovery on the issue of proper purpose. In January 2019 the court sanctioned Pederson for failing to appear for his deposition.

At his rescheduled deposition the next month, Pederson made several statements that ASRC claimed demonstrated that he had an ulterior, unstated, and improper purpose. Pederson said that his stated purpose was not “the only purpose” and that he also wanted to know if there was “compensation [to the executives] that wasn’t reported to the shareholders.” When asked why he did not state that purpose, he responded, “I wouldn’t say that I hid it. I think it was pretty obvious.” He went on to say that he wanted “true and accurate information on the compensation records.”

The superior court held an evidentiary hearing following the deposition. Pederson provided an affidavit in which he reiterated that his true purpose was to compare executive compensation disclosures with “true and accurate records” of executive compensation. On cross-examination he explained that he thought his purpose was “implicit in the demand.”

In July 2020 the superior court issued findings of fact regarding proper purpose. The superior court stated it understood Pederson’s purpose to be the one he had most recently advocated at the evidentiary hearing: “[t]o obtain true and accurate information and records.” The court concluded that “[t]o merely state that [Pederson] wants accurate information is not sufficient.” The court also rejected Pederson’s contention that the purpose of auditing executive compensation was obvious from the face of his request. The superior court concluded that “[h]ad Pederson expressly stated that he suspected shenanigans, the Court would likely have found that he identified a proper purpose.” The court then issued a final judgment in favor of ASRC.

Pederson appeals, arguing the superior court erred in interpreting and applying the shareholder inspection statute.[16]

III. STANDARD OF REVIEW

Statutory interpretation is a question of law, which we review de novo.[17] “When construing statutes, we consider three factors: ‘the language of the statute, the legislative history, and the legislative purpose behind the statute.'”[18]

IV. DISCUSSION

Alaska Statute 10.06.430(b) requires a corporation to “make its books and records of account…reasonably available for inspection…upon written demand [by a shareholder] stating with reasonable particularity the purpose of the inspection.” Alaska Statute 10.06.430(c) provides a cause of action for shareholders seeking to enforce their inspection right.[19] Alaska Statute 10.06.430(c) also lists defenses to an enforcement action, including that the shareholder ‘was not acting in good faith or for a proper purpose in making” the inspection request. Pederson appeals the superior court’s finding that his inspection request did not state a proper purpose.

A. It Was Error To Find That Pederson’s Purpose Was Improper.

Pederson argues the superior court incorrectly applied AS 10.06.430 in a manner that required him to carry the burden of proving “a proper purpose pursuant to a new [and] more stringent standard.” But whether a shareholder has stated a proper inspection purpose is primarily a question of law, and burdens and standards of proof do not apply to questions of law.[20] Although some factual disputes may arise in the course of determining the propriety of a shareholder’s stated purpose, here ASRC concedes that “the purpose Pederson stated in his demands appeared to be facially proper.” We agree.

Typically, a court should be able to determine from the face of the inspection request whether a stated purpose is a legally proper basis for inspection. Pederson’s letter included three separate inspection requests. Each request contained a paragraph beginning with “Purpose of Inspection.” The superior court appears to have concluded that Pederson’s purpose is limited to the paragraphs that are specifically labeled as statements of purpose. This was error. The stated purpose must be gleaned from the totality of the written request, including the cover letter. For example, if Pederson had said in his cover letter he wished to engage in corporate espionage but had listed a legally proper purpose in his statements of purpose, a court could certainly rely on the cover letter to find an improper purpose. The converse is also true.

The superior court found that “Pederson failed to provide [the necessary] specificity. Had Pederson expressly stated that he suspected shenanigans [by ASRC executives], the Court would likely have found that he had identified a proper purpose.” But it is clear from the face of Pederson’s request that he did suspect “shenanigans” by ASRC executives. Pederson sought information relating to the “Supplemental Executive Retirement Plan,” the “process for officer and executive compensation,” and the conveyance of ASRC interests to “Officers or Executives of ASRC.” Pederson asserted that “there are clearly [some board members] who view Board membership as the path to the ‘pot o’ gold’ and life changing wealth” and that “Shareholder benefits seem to be of secondary importance.” He explained that these issues must be addressed “in light of recent dramatic increases in officer and executive compensation packages, and in my opinion, the transfer of corporate assets to executives…Someone has to step-up [sic] and do something to…place[] limits on management’s ability to enrich themselves…at the expense of the Shareholders.” The totality of Pederson’s request makes clear that he was seeking information on executive compensation because he suspected ASRC executives were enriching themselves at the expense of shareholders.

Auditing executive compensation is a proper purpose for a shareholder to pursue. The legislative history of the shareholder inspection statute explains that a request seeking “proof of mismanagement or other wrongdoing” sits at the apex of the shareholder’s inspection right.[21] Indeed, in Pederson I, we explained that records of individual executive compensation are “crucial to the shareholders’ ability to monitor the performance of their corporate agents and protect their interests as shareholders.”[22]

Pederson’s stated request clearly explained that he was seeking to audit executive compensation because he suspected ASRC executives of misappropriating shareholder funds. It was entirely proper for him to seek inspection of related documents.

B. ASRC Did Not Have Good Cause to Suspect Pederson’s Motives When It Denied His Request.

Contrary to ASRC’s arguments to us, nothing about Pederson’s 2019 deposition suggests that he disclaimed his originally asserted purpose in favor of a newly asserted, improper purpose. ASRC points to Pederson’s deposition testimony that his originally stated purpose “wasn’t the only purpose” and that he also wanted to know “if there was…compensation that was made [to the executive] that wasn’t reported to the shareholders that should have been reported.” When asked why he originally did not state that purpose, he responded: “I wouldn’t say that I hid it. I think it was pretty obvious.” He further stated that he wanted “true and accurate information on the compensation records.” The superior court incorrectly focused on Pederson’s last statement to conclude that his only purpose was obtaining true and accurate information and that his 2009 records inspection request thus was not made for a proper purpose.

But, as we explained above, Pederson did assert a proper purpose in his 2009 records inspection request, and nothing about his deposition or trial testimony suggests otherwise. In short, Pederson stated a proper purpose for his 2009 records inspection request; ASRC did not then, and does not now — 13 years later — have good cause to deny the records request;[23] and it was error to enter judgment for ASRC. We therefore reverse the judgment and remand to the superior court for entry of judgment in Pederson’s favor, declaring that ASRC wrongfully rejected Pederson’s 2009 records inspection request and entering appropriate relief.

C. The Superior Court Did Not Err By Sanctioning Pederson.

Pederson appears to challenge the superior court’s order sanctioning him for failing to comply with discovery. Other than complaining he was “ordered to submit to a ‘short deposition’ on a single question [and] could no longer continue after three hours…,” Pederson does not develop his argument.

The superior court sanctioned Pederson for failing to timely respond to discovery requests and failing to appear at his scheduled deposition. It found that “Pederson willfully failed to attend his own deposition after being served with proper notice and that he further failed to inform opposing counsel…that he planned to not attend.” Pederson does not dispute these findings. We affirm the superior court’s discovery sanctions.

D. Pederson Presents No Evidence That The Superior Court Was Biased Or Violated His Rights To Due Process And Equal Protection.

Pederson argues that the various superior court judges who presided over his case have been motivated by racial bias against him as an Alaska Native litigant. The only evidence of bias he cites is the length of time this litigation has continued and his belief that the superior court failed to abide by court procedure in order to favor ASRC. He concedes, however, that “with [the evidence] available to him” he cannot “meet the applicable standard” for judicial bias.[24]

His concession is well taken. “Pederson cannot rely solely on the court’s adverse rulings as evidence of bias; he must point to specific words or actions showing the court was partial.”[25] Because “[h]e has not made these [specific] showings,” and the record gives no indication of bias, we reject Pederson’s allegations.[26]

V. CONCLUSION

We AFFIRM the superior court’s order sanctioning Pederson for failing to comply with discovery. We REVERSE the superior court’s final judgment in favor of ASRC, VACATE its findings of fact and conclusions of law, and REMAND for further proceedings consistent with this opinion.

Pederson v. Arctic Slope Regional Corporation

I. INTRODUCTION

A shareholder of Arctic Slope Regional Corporation sought to exercise his statutory right to inspect books and records of account and minutes of board and committee meetings relating to executive compensation and an alleged transfer of equity in corporate subsidiaries to executives. The Corporation claimed that the materials were confidential and sought to negotiate a confidentiality agreement prior to release of any documents. When the shareholder ultimately rejected the proffered confidentiality agreement, the Corporation released to the shareholder only the annual reports and proxy statements of the Corporation and the minutes describing the subjects discussed and actions taken at the meetings. The shareholder did not receive the detailed, individualized compensation information he sought.

The shareholder brought suit, claiming that the Corporation withheld information that it was required to release under AS 10.06.430 and that the Corporation improperly insisted on a confidentiality agreement prior to releasing any of the requested documents. The superior court ruled that electronically maintained accounting records are not within the statutory category of “books and records of account”; that the Corporation satisfied the requirement to disclose “books and records of account” when it disclosed only annual reports and proxy statements; and that the Corporation satisfied the requirement to disclose meeting minutes. It further concluded that the Corporation could demand a confidentiality agreement prior to release of any information, and that the terms of the particular confidentiality agreement offered in this case were reasonable. The shareholder appeals, arguing that the statutory right of inspection encompasses more than what the Corporation provided and that the Corporation had no right to demand the confidentiality agreement in this case.

This appeal presents several issues of first impression in Alaska. We hold that (1) the statutory phrase “books and records of account” includes electronically maintained books and records of account; (2) the statutory phrase also goes beyond mere annual reports and proxy statements; and (3) the statutory phrase at least encompasses monthly financial statements, records of receipts, disbursements and payments, accounting ledgers, and other financial accounting documents, including records of individual executive compensation and transfers of corporate assets or interests to executives. We further hold that (4) the statutory category “minutes” does not encompass all presentations or reports made to the board but rather merely requires a record of the items addressed and actions taken at the meetings, as have been faithfully recorded after the meeting. Finally, we hold that (5) a corporation may request a confidentiality agreement as a prerequisite to distributing otherwise-inspectable documents provided that the agreement reasonably defines the scope of confidential information subject to the agreement and contains confidentiality provisions that are not unreasonably restrictive in light of the shareholder’s proper purpose and the corporation’s legitimate confidentiality concerns. We conclude that the Corporation’s proffered confidentiality agreement in this case was not sufficiently tailored or limited in scope and thus Pederson’s refusal to sign it could not serve as a legal basis for avoiding liability for denying his inspection claims.

II. FACTS AND PROCEEDINGS

A. The Parties

Arctic Slope Regional Corporation is an Alaska Native Regional Corporation organized under the Alaska Native Claims Settlement Act[1] and AS 10.06.960 and incorporated under the Alaska Corporations Code, AS 10.06. At the time of trial, the Corporation took in about $2.5 billion in revenue each year, employed about 10,000 people, and had operations across the country and around the world. The Corporation had about 11,000 shareholders in 2012,[2] about 6,000 of whom were adults holding voting shares.

Rodney Peterson is an original shareholder of the Corporation, holding 100 Class A shares. An attorney and a member of the Alaska bar, Pederson worked as assistant corporate counsel to the Corporation and later as an executive for one of the Corporation’s subsidiaries. The employment relationship soured. Since then Pederson has unsuccessfully sought election to the Corporation’s board and at the time of trial in this case had filed three lawsuits against the Corporation, as well as a counterclaim in a suit brought by the Corporation against Pederson.

B. Pederson’s Request for Detailed, Individual Compensation Information for Executives And Board Members Contained Within “Books And Records Of Account” And “Minutes” Under AS 10.06.430’s Shareholder Inspection Right

On June 17, 2009, Pederson sent three letters to the Corporation seeking to exercise his shareholder inspection right under AS 10.06.430(b).[3] He sought “to inspect and copy the books, records of account and minutes of proceedings of the [Corporation’s] Board of Directors and Committees of the [Corporation’s] Board of Directors” that were “in any way related to, discussing, considering, making recommendations in regard to, funding, and approv[ing]” four different actions related to compensation of and transfer of Corporate interests to executives, board members, and Corporate officers.[4]

Pederson’s demand letters stated that the purpose of his request for inspection was “[t]o obtain true and accurate information and records regarding” the four Corporate actions listed above. The letters went on to clarify that the information he obtained would be used only to persuade his fellow shareholders to adopt two specific changes to the Corporation’s governing documents.[5]

C. The Corporation Demands A Confidentiality Agreement Prior To Release Of Any Documents; Pederson Negotiates But Then Rejects Any Confidentiality Agreement.

Mary Ellen Ahmaogak, the Corporation’s Corporate Secretary, replied to Pederson’s initial demand letters on July 28, 2009, proposing to give Pederson the records he had requested “to the extent they consist of copies of the relevant portions of the minutes of [the Corporation’s] board and committee meetings and copies of the relevant portions of [the Corporation’s] regularly maintained accounting records.” The Corporation notified Pederson of its view that “[t]he bulk of the records responsive to your request consist of annual reports and proxy statements for [the Corporation] and reports made to [the Corporation’s] Compensation Committee by the Hay Group,” an independent executive-compensation consultancy. The Corporation also asserted that “[t]he books and records you have requested contain trade secrets and confidential information” and insisted that prior to its release of the records, Pederson must “sign a confidentiality agreement regarding these books and records to ensure they will not be disclosed other than to people entitled to see them.”

The Corporation’s first proffered confidentiality agreement stated that “[a]ll”[6] of the information released was “Confidential Information” subject to the terms of the agreement despite being inspectable “pursuant to AS 10.06.430.”[7] The agreement would permit disclosure “to other shareholders” and their agents but would make Pederson liable to the Corporation for unauthorized disclosure by those third parties.

Pederson responded on August 6, 2009, suggesting specific additions and subtractions to the Corporation’s first proffered confidentiality agreement. But Pederson soon changed his mind and rejected the notion that he had to sign a confidentiality agreement as a prerequisite to obtaining the materials he had requested pursuant to AS 10.06.430. He stated in a letter dated August 12, 2009, that nothing in the statute would require him to sign such an agreement, and he pledged in lieu of an agreement “to do [his] best to ensure that any information [he] prepare[d] for [his] fellow Shareholders based on any actual confidential information contained in the records [he] ha[d] requested [would] not [be] available to the public.” He proposed to “prepar[e] the information in a manner that minimizes the disclosure of actual confidential information, while still allowing [Pederson] to provide enough information to Shareholders to make persuasive arguments for updating [the Corporation’s] corporate governance documents.”

After receiving Pederson’s suggested edits to the confidentiality agreement, the Corporation sent him a responsive letter dated August 21, 2009, agreeing “to almost all of the modifications [Pederson] proposed.” But the Corporation made one significant addition to the newest draft of the agreement: After accepting Pederson’s request to omit language subjecting him to personal liability for disclosures of confidential information by third parties with whom he would be permitted to share confidential information, the Corporation inserted a new requirement that Pederson “obtain…a confidentiality agreement…that subjects [the person to whom Pederson seeks to disclose confidential information] to the same restrictions imposed on [Pederson] in this Agreement.”

In a letter dated August 24, 2009, after receiving the Corporation’s second proffered confidentiality agreement, Pederson rejected the new draft and reiterated his rejection of any confidentiality agreement. He stated his view that he was “already legally entitled” to the documents he requested, regardless of the existence of a confidentiality agreement. He further objected to the scope of the definition of “Confidential Information” in the draft agreement, to the potential liability to which it subjected him, and to the “extremely onerous requirement that [he] obtain signed agreements from every shareholder with whom [he] share[d] the information.” He reiterated his offer to “take reasonable measures to limit access by the public to certain information that is actually confidential or a trade secret, but management must point out what that information is.”

D. The Corporation Releases Some Information.

The Corporation’s in-house and outside counsel attempted to determine the scope of the information that the Corporation had to release under AS 10.06.430. It appeared that the Corporation had never had any shareholder requests to inspect corporate books and records of account and minutes until Pederson’s initial demand letters of June 17, 2009, and that the Corporation had no established procedure for responding to such requests. Similarly, no cases from this court defined the scope of “minutes” or “books and records of account.” The Corporation eventually determined that “books and records of account” included only the Corporation’s annual reports and proxy statements and that the Corporation possessed no other “books and records of account” within the meaning of the statute. It also concluded that “minutes,” as used in the statute, included the concise descriptions of what happens in board meetings that are prepared after the meetings but did not include presentations made to the board, handouts provided to the board, or other sensitive confidential or proprietary information that may have been omitted from the typed minutes for various reasons. The Corporation went on to identify other materials such as reports and presentations to the board that it concluded were not part of the minutes or books and records of account, and thus not covered by the statute, but were relevant for Pederson’s stated purposes.

On August 27, 2009, three days after the date of Pederson’s second letter rejecting any confidentiality agreement, the Corporation informed Pederson that it was delivering to him “all of the material that you requested that can be made available, in the absence of protections safeguarding confidentiality.” Later, the Corporation explained that it redacted “specific salary and benefits information of individual employees.” The Corporation’s assistant corporate counsel testified at trial that he had reviewed all of the corporate minutes as well as the books and records of account, as he had defined these terms, compiled all information in those sources related to Pederson’s stated interests, and transmitted all of those required documents without redaction of relevant information to Pederson’s attorney. The assistant corporate counsel also testified that he identified a number of reports to the board that were relevant to Pederson’s interest but not part of the “minutes” or “books and records of account” as he had defined those terms; he produced those reports for Pederson “[a]s an accommodation” after redacting information that the Corporation was not willing to share voluntarily without the sort of confidentiality agreement that Pederson had rejected.

E. Pre-Trial Proceedings

Pederson brought suit against the Corporation and Mary Ellen Ahmaogak, in her capacity as Corporate Secretary (collectively, “the Corporation”). He claimed that he had submitted a written demand stating with particularity a proper purpose for inspecting minutes and books and records of account, as required under AS 10.06.430(b), and that the Corporation had sought to impose unreasonable conditions on release of the information he sought and later improperly denied his request by releasing less than what was required under the statute. He sought a money judgment as permitted under AS 10.06.430(c), including punitive damages, and a court order as permitted under AS 10.06.430(d) compelling production of all minutes and books and records of account relevant to the proper purpose stated in his demand letters but not produced by the Corporation.

Pederson and the Corporation both moved for summary judgment. The Corporation stipulated “[f]or purposes of the summary judgment cross-motions” that it “does not dispute that, in his correspondence, Pederson stated legally proper purposes for his requests.” Thus, in the view of the parties, the only issues remaining in the case were the legal issues of the scope of the inspection right under AS 10.06.430 and the Corporation’s ability to demand a confidentiality agreement prior to its release of any information.

The superior court initially denied summary judgment to both parties because of three remaining factual disputes: (1) whether the omitted portions of the disclosed documents were truly unrelated to Pederson’s requests; (2) whether additional responsive documents were never disclosed at all; and (3) whether the Corporation produced required documents within a “reasonable time.”

The Corporation moved for reconsideration, arguing that the only factual disputes as to which documents had been disclosed and whether the redactions included inspectable information could be resolved through in camera review of the disclosed documents and the originals. Pederson did not oppose the Corporation’s motion for reconsideration. He reasoned that the in camera review process would dispose of all remaining factual disputes and that the other remaining issues relating to the confidentiality agreement were legal issues. And in Pederson’s view, the factual questions would be relevant only if the superior court were to address the initial legal question whether a corporation can demand a confidentiality agreement prior to disclosing statutorily required information.

The superior court granted the motion for reconsideration, and the Corporation provided the superior court with copies of the documents provided to Pederson as well as unredacted copies of the original documents. In order to confirm the authenticity of the documents provided to the superior court, Pederson was permitted to compare the redacted documents provided to the court with the documents he already possessed. Due to the allegedly sensitive nature of their contents, the unredacted original documents were provided to the court ex parte; Pederson was not permitted to view them. After comparing the documents in his possession to the redacted copies to be submitted to the court, Pederson filed an affidavit stating that there were documents in the pile to be submitted to the court that he had not received in the Corporation’s prior disclosure, including the 2008 Annual Report, a board resolution, and several pages of committee minutes corresponding to missing pages.

On February 4, 2011, the superior court ruled on reconsideration that the Corporation was entitled to partial summary judgment. The superior court concluded that the statutory requirement that a corporation allow inspection of “books and records of account” was satisfied in this case by the release of annual reports and proxy statements, which “contain independent accounting audits of [the Corporation], including overall and averaged information about executive compensation” but not “detailed accounts of compensation for individual executives.” Similarly, the superior court implicitly ruled that the Corporation satisfied the statutory requirement to allow inspection of “minutes” by providing the typed post-meeting notes and by withholding more-detailed reports presented at the meetings.

Pederson moved for reconsideration of the partial grant of summary judgment. He argued that the superior court had overlooked a regulation applicable to Alaska Native Regional Corporations which states that the corporations’ proxy solicitations must include “a statement of all current remuneration distributed or accrued and of all future remuneration contributed during the corporation’s last fiscal year on behalf of…each of the five most highly compensated directors or officers for his service in all capacities to the corporation and its subsidiaries, naming each such person.”[8] Pederson maintained that regardless of the superior court’s holding in the partial grant of summary judgment, the statutory inspection right extends to classes of documents beyond what the Corporation gave him in this case. The superior court denied Pederson’s motion for reconsideration, stating that it would deal with this issue at trial since full summary judgment had been denied.

F. Trial Proceedings

On September 18, 2012, the superior court held a one-day bench trial. Although the pre-trial orders purported to resolve many questions of fact and law, the superior court ultimately allowed[9] Pederson to argue de novo that “books and records of account,” as used in the statute, “should clearly include the detail, the electronic records of accounts, monthly financial statements, budget documents, ledgers, and even check registers that form the basis of the financial records of the corporation.” He also maintained that “just because [the records were] in electronic form shouldn’t be an excuse for excluding them from inspection.” Pederson also testified that in his experience working for the Corporation, the company maintained an electronic record-keeping system that makes all detailed financial transaction information “easily and quickly” accessible and available at corporate headquarters. The Corporation’s counsel stipulated to the fact that “obviously there are financial records, and it is possible for someone to query the system” with little effort to determine, for example, “how much did we spend on paper clips in June.” Pederson maintained that he has never been provided the “actual books and records of account of the company,” as defined above, but rather just the annual financial reports contained within the annual reports and proxy statements, which had “no detail in them.” (Emphasis added.) Pederson also argued that “minutes,” as used in the statute, included reports and presentations made to the board and its committees even if not typed up in the post-meeting descriptions.

Regarding the confidentiality agreement, Pederson argued that he was entitled to access “[a]ll the books and records directly connected to [his] demands,” without redaction, even if he refused to sign a confidentiality agreement. He further argued that even if a corporation may request a confidentiality agreement, the confidentiality agreement in this case was initially overbroad because it encompassed more than what was strictly confidential and was overly restrictive in its requirement that he obtain confidentiality agreements from all potential recipients of information. He specifically argued that because of the proxy disclosure regulations, 3 AAC 08.345, the Corporation can claim no confidentiality with respect to compensation information for at least the top five most highly compensated executives and possibly others who could potentially be on that list if the existing disclosures were incorrect.

The Corporation maintained its position that it possessed no “books and records of account” because it maintained electronic accounting records and that the annual reports and proxy statements were adequate substitutes to satisfy Pederson’s requests. The Corporation also argued that “minutes” include the concise descriptions of what happens in board and committee meetings that are prepared after the meetings but do not include presentations and reports made in those meetings. The Corporation asserted that the confidentiality agreement was “a bit of a sideshow” because it had released everything required under its interpretation of the statute and the proffered confidentiality agreement was to apply only to any additional, voluntarily supplied information.

G. The Superior Court’s Findings Of Fact And Conclusions Of Law

After trial concluded, the superior court issued written findings of fact and conclusions of law and entered final judgment for the Corporation.

On the legal issues related to the scope of inspection under AS 10.06.430, the superior court “adhere[d]” to its determination at summary judgment that the statutory requirement to disclose ” ‘books and records of account’…does not require a corporation to disclose to a shareholder on request all of its financial statements, including monthly financial statements, budget documents, records of disbursement, check registers, payments to executives and employees, and electronic records of account.” (Emphasis in original). Rather, “providing the annual certified financial statements satisfied the statutory obligation…particularly where a corporation establishes that it has no traditional accounting ledger and its electronic records are extraordinarily voluminous.” The superior court concluded that the Corporation established that factual predicate and that release of annual reports thus satisfied the requirements of the statute in this case.

The superior court rejected Pederson’s argument that 3 AAC 08.345’s proxy-disclosure rules broadened the scope of the inspection right under AS 10.06.430 in order to verify the truth of the disclosures. “[Alaska Statute] 10.06.430 [does not] require[] an Alaska Native Corporation to provide its shareholders, upon request, different documents than any other corporation covered by AS 10.06.430.”

On the specific factual dispute whether Pederson had received all the materials that the Corporation claimed it had delivered to him, the superior court found that Pederson had received the disputed documents, reasoning that “Pederson’s testimony [is] not credible” and accepting instead the testimony of a paralegal who prepared the documents. The superior court thus stood by its finding at partial summary judgment that Pederson had received all relevant information, without omission or redaction, within the “minutes” and “books and records of account” as the superior court defined those terms.

The superior court further concluded that a corporation could demand a reasonable confidentiality agreement before releasing inspectable documents and determined that the confidentiality agreement requested by the Corporation was “reasonable” because it “agreed to all of Mr. Pederson’s requests except that one that would essentially vitiate the confidentiality agreement and reduce it to a nullity” by permitting Pederson to disclose information to other shareholders without first obtaining a confidentiality agreement from those other shareholders. The superior court never addressed whether it was permissible for the Corporation to label all information requested in Pederson’s demand letters “Confidential Information” subject to the terms of the agreement.

Finally, the superior court determined that “there was no delay” and that “the time it took to produce the documents was reasonable” because “[m]ost of the time was taken up with negotiations of a confidentiality agreement between the parties that failed.” The superior court also found that after negotiations over the confidentiality agreement “collapsed,” the Corporation’s assistant corporate counsel “moved as quickly as he could to assemble and provide to Pederson in August 2009 all the documents that he understood the corporation was statutorily obligated to provide,” plus additional documents provided gratuitously.

Pederson appeals.

III. STANDARD OF REVIEW

“We review a trial court’s legal analysis de novo.”[10] Under the de novo standard of review, we use our independent judgment,[11] and our “duty is to adopt the rule of law that is most persuasive in light of precedent, reason, and policy.”[12] When interpreting a statute, we have frequently elaborated that “we must consider its language, its purpose, and its legislative history, in an attempt to give effect to the legislature’s intent, with due regard for the meaning the statutory language conveys to others.”[13]

IV. DISCUSSION

The right of shareholder inspection is an important method for monitoring agent performance and enhancing principal control over corporate agents. According to a leading treatise, “the basis for the shareholder’s right to inspection is found in the ownership of shares in the corporation and the necessity of self-protection.”[14] Not only does a shareholder have “a fundamental right to be intelligently informed about corporate affairs,”[15] but the shareholder also must have a tool to ensure that the management and board of directors are “discharging their duties” in “good faith” rather than “deliberately keep[ing] the shareholders in ignorance or under misapprehension as to the true condition of affairs.”[16] Thus, the shareholder inspection right regulates the agency relationship between corporate shareholders and those whose job it is to represent shareholders’ interests at the helm of the corporation.

All corporations suffer from inherent principal-agent tensions, and shareholders need adequate tools to obtain information in order to protect their interests against predation by wayward agents.[17] On the other side of the balance, shareholders have countervailing interest in permitting the efficient operation of the corporation free from improper meddling and forced disclosure of information that might harm the shareholders.[18] Corporate law governing shareholder access to information balances both interests.[19]

Several mechanisms have been developed for providing shareholders access to corporate information, including unilateral reporting requirements[20] and the common law of statutory rights of shareholders to inspect certain corporate documents. Today, shareholders in every state have the right to inspect certain corporate documents, whether under statute, the common law, or both.[21]

This appeal raises three important groups of issues of first impression in Alaska regarding the scope of the statutory[22] inspection right created by AS 10.06.430: (1) What is the scope of the statutory right for shareholders to inspect “books and records of account”? Does that right extend beyond annual reports and proxy statements already submitted to the shareholders each year, and does it include electronically maintained books and records of account? And does the right extend to individual compensation information for corporate executives and board members? (2) What is the scope of the statutory right for shareholders to inspect “minutes”? Does that right extend beyond concise descriptions of the topics discussed and actions taken and include presentations and reports made during the meeting? (3) Under what circumstances, if any, may a corporation condition release of documents on receipt of a confidentiality agreement? What scope and confidentiality protections are reasonable in such a confidentiality agreement?

The superior court erred in its treatment of the first and third issues but correctly decided the second question.

A. The Superior Court Interpreted The Scope Of “Books and Records Of Account” In AS 10.06.430 Too Narrowly.

Alaska Statute 10.06.430(a) requires a corporation to “keep correct and complete books and records of account…in written form or in any other form capable of being converted into written form within a reasonable time.” Alaska Statute 10.06.430(b) directs a corporation to make those “books and records of account…reasonably available for inspection and copying at the registered office or principal place of business…by a shareholder of the corporation…at a reasonable time and for a proper purpose,” upon “written demand stating with reasonable particularity the purpose of the inspection.” Alaska Statute 10.06.430(b) further clarifies that “[o]nly books and records of account [and] minutes…directly connected to the stated purpose of the inspection may be inspected or copied.”

The superior court ruled that the statutory requirement to disclose books and records of account “does not require a corporation to disclose to a shareholder on request all of its financial statements [relevant to the inspection request], including monthly financial statements, budget documents, records of disbursement, check registers, payments to executives and employees, and electronic records of account.” (Emphasis in original.) Rather, the superior court reasoned that “providing the annual certified financial statements satisfied the statutory obligation…, particularly where a corporation establishes that it has no traditional accounting ledger and its electronic records are extraordinarily voluminous.”

On appeal, Pederson argues that the Corporation violated the statute by failing to disclose financial records encompassed within the statutory definition of “book and records of account” and instead substituting less-detailed annual financial reports. Pederson defines “books and records of account” as encompassing “all corporate financial books and records,” including electronically maintained financial records, and he argues that it was error for the superior court to substitute “annual reports in lieu of an actual inspection of [the Corporation’s] books and records of account.”

The Corporation responds that “books and records of account” should be defined “narrowly” because of the Corporation’s “interest in being protected against harassment,” its interest in guarding against the dissemination of confidential information, and the need to distinguish the shareholder inspection right from the broader inspection right of directors.[23] The Corporation justifies the superior court’s ruling that annual reports and proxy solicitation statements satisfied the production requirement for “books and records of account” because the Corporation “maintains no literal ‘books and records of account’; all of its financial records are maintained electronically.” Because the inspection statute “cannot possibly intend to require corporations to provide shareholders access to a computer so that they may browse the corporation’s electronic financial records,” the Corporation asks this court to conclude that the Corporation “reasonably used [annual and proxy solicitation statements] that were readily available.”[24]

Pederson replies that the Corporation’s primary argument for affirmance that electronic accounting records are voluminous and do not fall within the meaning of “books and records of account” is “a ludicrous proposition” because “[v]irtually every corporation maintains records electronically,” and such a rule would “leave shareholders with virtually no right of inspection of financial information of the Corporation that they own.” He also notes that “the inspection statute contemplates that records will be kept in other than written form and requires that they be easily convertible into written form for inspection.” Pederson reasons that if the inspection statute allows management “to simply ‘re-give’ annual reports,” then it is a nullity.

1. “Books and records of account” includes electronic records.

We reject the Corporation’s argument that it “maintains no literal ‘books and records of account'” within the meaning of AS 10.06.430 because “all of its financial records are maintained electronically.” Alaska Statute 10.06.430(a) specifically contemplates electronic storage of inspectable records, requiring a corporation to “keep correct and complete books and records of account…in written form or in any other form capable of being converted into written form within a reasonable time.” It is manifest that electronic records are included within the statutory definition of “books and records of account.”

The Corporation argues that we should avoid this holding for fear that “the statute [would] require corporations to provide shareholders access to a computer so that they may browse the corporation’s electronic financial records.” But Pederson never asked to use a computer to browse the Corporation’s accounting software. Rather, he asked for copies of documents containing specific information, copies that could be (and, under the statute, must be capable of being) printed in writing.

The Corporation also argues that the scope of “books and records of account” should be narrowly construed to protect corporate interests in confidentiality. But we decline to override clear statutory text, which includes electronic documents in “books and records of account,” on such policy grounds, especially when other avenues exist for protecting legitimate confidentiality interests.[25] Finally, the Corporation argues that electronic financial records are somehow less accessible than printed ledgers and that this alleged fact is legally relevant to the issue of what is included in “books and records of account.” But the Corporation stipulated at trial to the fact that its electronic system of financial recordkeeping “obviously [contains]…financial records, and it is possible for someone to query the system” with little effort to determine, for example, “how much did we spend on paper clips in June.” And even if electronic accounting records were somehow less accessible than traditional printed ledgers, the inaccessibility of documents is not relevant to the legal determination of what documents fall within “books and records of account,” because, as a leading treatise notes, “the corporation cannot fail to keep books and thus avoid the statutory penalty.”[26]

Alaska Statute 10.06.430(a) directs that corporations “shall keep correct and complete books and records of account.” The Corporation does so, electronically. We conclude that the electronic nature of the Corporation’s books has no bearing on the legal issue in this case: the scope of “books and records of account” under AS 10.06.430. If the Corporation is correct that Pederson was entitled to only annual and proxy reports along with the minutes, then it must find support on alternative grounds.

2. “Books and records of account” goes beyond the information contained in annual reports and proxy solicitation statements.

The phrase “books and records of account” used in AS 10.06.430 must extend beyond mere annual reports in order to give meaning to the statutory language and avoid statutory surplusage. A separate provision in the corporation code, AS 10.06.433(a), already requires that corporations send shareholders an “annual report” that “must contain a balance sheet as of the end of the fiscal year and an income statement and statement of changes in financial position for the fiscal year, accompanied by a report on the fiscal year by independent accountants or, if there is no such report, the certificate of an authorized officer of the corporation that the statements were prepared without audit from the books and records of the corporation.” To interpret AS 10.06.430(b) to require no more than what is already required by AS 10.06.433(a) would be to violate the presumption” ‘that the legislature intended every word, sentence, or provision of a statute to have some purpose, force, and effect, and that no words or provisions are superfluous.'”[27] It is especially clear that the legislature intended for the shareholder inspection requirement of AS 10.06.430(b) because both requirements were part of the same statutory section in the original 1957 statute.[28]

If the provision of annual reports could satisfy a demand to inspect “books and records of account,” several statutory limitations on the scope of shareholder’s inspection demand would make little sense, including the statutory requirements that the shareholder’s request state a “proper purpose” and that only documents “directly connected to [that] purpose” will be inspectable.[29] Those limitations make sense only if the scope of inspectable documents within “books and records of account” goes beyond mere annual reports and proxy statements, which are released to all shareholders each year.

For these reasons, at least two other jurisdictions have recognized that the shareholder right to inspect “books and records of account” extends well beyond the distinct statutory right to receive annual reports.[30] Similarly, we conclude that Pederson’s statutory right of inspection of “books and records of account” extended beyond the annual reports and proxy statements provided by the Corporation in this case. And Pederson’s statutory right of inspection was not satisfied by offering annual reports and proxy statements as substitute documents when his right reached beyond those documents.[31] “Where the right of inspection exists, refusal of it cannot be justified by proffering the shareholders a substitute…”[32]

The superior court, in holding that the annual reports and proxy statements sufficed under AS 10.06.430(b), relied entirely on the fact that the Corporation “has no traditional accounting ledger and its electronic records are extraordinarily voluminous,” concluding that it therefore should be excused from actually producing its accounting records. But as we conclude above, the electronic nature of the documents is entirely irrelevant to whether documents are inspectable “books and records of account.” Accordingly, we conclude that provision of annual reports and proxy statements did not provide an adequate substitute to furnishing the actual books and records of account inspectable pursuant to Pederson’s demand letters.

3. “Books and records of account” includes detailed accounting documents, including individual executive compensation information.

The statutory phrase “books and records of account” encompasses monthly financial statements, records of receipts, disbursements and payments, accounting ledgers, and other financial accounting documents, including records of individual executive compensation and transfers of corporate assets or interests to executives. Such information is crucial to the shareholders’ ability to monitor the performance of their corporate agents and protect their interests as shareholders.[33]

At least five of our sister states have interpreted their inspection rights to run to individual executive compensation information.[34] The Corporation identifies no cases from other jurisdictions holding that individual compensation information is not inspectable as “books and records of account.” The Corporation attempts to undermine the persuasive value of the cases holding compensation information to be inspectable by complaining that “[f]ew [of these cases] are modern” and observing that some “date from the 1930s.” But no modern cases seem to cut in the other direction. And these seminal cases interpret statutes in other states that closely resemble Alaska’s current statute. Indeed, we find it particularly persuasive that the Illinois courts have held that individual executive compensation information is inspectable pursuant to its statute[35] because Illinois’s inspection statute and the case law interpreting it formed the basis for the Model Business Corporations Act that Alaska adopted in 1957.[36]

Accordingly, we reverse the superior court’s contrary conclusions regarding the scope of “books and records of account” and remand for further proceedings in accordance with this opinion. We note that our holding does not depend on the Corporation’s status as an Alaska Native corporation or Pederson’s status as a shareholder of an Alaska Native corporation. Pederson may be correct that regulations promulgated by the State and applying to Alaska Native corporations, 3 AAC 08.345(b)(2)(A),[37] provide him with an additional proper purpose for inspection not available in the same way to shareholders of other corporations. But the Corporation does not dispute Pederson’s proper purpose on appeal. The scope of “books and records of account” relies on nothing unique to the factual circumstances of this case.

B. The Superior Court Correctly Interpreted The Meaning of “Minutes” In AS 10.06.430.

Alaska Statute 10.06.430(a) also requires a corporation to keep “correct and complete…minutes of proceedings of its shareholders, board, and committees of the board.” Alaska Statute 10.06.430(b) conveys to shareholders the right to inspect those minutes under the same conditions as it grants the right to inspect “books and records of account.”

The superior court implicitly concluded that the Corporation’s duty to disclose “minutes” was satisfied in this case when the Corporation provided Pederson with the post hoc descriptions of what was discussed and decided in board meetings but withheld presentations and reports made to the board. On appeal in this court, Pederson and the Corporation primarily focus on the meaning of “books and records of account,” addressing the meaning of “minutes” only briefly. Pederson argues that “minutes” must include “all of the documents contained in the minute books of the Corporation,” which must include “any contracts or agreements approved, or documents or reports used to reach a decision.” Specifically, Pederson claims that the actual terms of a deal transferring “millions of dollars worth of stock to two executives” must be part of the minutes in this case and that the Corporation cannot provide merely “a brief reference to the Board discussing [the deal].” The Corporation responds that the term “minutes” “is commonly understood to mean ‘the written record of an official proceeding’ ” and that minutes “generally do not encompass documents distributed to committee members before or at the meeting or copies of presentations made at meetings.”

We find no support for Pederson’s expansive definition of “minutes” in the relevant authorities. Black’s Law Dictionary defines “minutes” and “minutes book” as including notes of the proceedings of a meeting and actions taken therein.[38] A prominent treatise states that 

[t]he minutes should clearly and certainly record the transactions and proceedings as they actually occurred and should definitely and positively show what action was taken by the corporation in the matters that they purport to memorialize. As a general rule, they should show the date when the meetings were held and those present. It is not necessary to show the vote by which a matter was adopted; a recital that the matter was adopted is sufficient. It is ordinarily not essential for contracts entered into pursuant to a resolution duly adopted and recorded as such in the minutes to also be copied into the minutes. A secretary is not obligated to include everything that is said in the minutes as long as the secretary accurately transcribes what has taken place.[39]

We therefore hold that the statutory category “minutes” does not ordinarily encompass presentations or reports made to the board but rather merely requires a record of the subjects discussed and actions taken at the meeting, which must be faithfully recorded.[40] Accordingly, we affirm the superior court’s implicit definition of the meaning of “minutes” in AS 10.06.430.

C. A Corporation May Not Demand A Confidentiality Agreement That Is Unreasonably Broad In Defining The Scope Of What Is Confidential Or Contains Unreasonably Restrictive Confidentiality Provisions.

Some books and records of account and other categories of inspectable documents directly relevant to a shareholder’s demand stating a proper purpose could, if released to the general public, harm the interests of the shareholders. Several tools exist in the law to protect sensitive information within the bounds of the inspection statute. But shareholders who have established a right to inspect corporate information ordinarily may not be denied that right merely because “the information sought is of a confidential nature.”[41] And here, the Corporation demanded that Pederson accede to an unreasonable confidentiality agreement. It therefore constructively denied his inspection right to any information that he would have otherwise been entitled to receive under the statute.

Two tools for protecting against the detrimental distribution of sensitive information are particularly well established in the law. First, a corporation can challenge the inspectability of the information in the first place, such as by challenging the shareholder’s proper purpose, challenging the assertion that the information is directly connected to the proper purpose, or challenging the inclusion of the information within the category of inspectable books or records of account. In particular, the statutory requirement that a shareholder have a “proper purpose” for inspecting the requested documents[42] functions as a confidentiality protection.

Confidential information is subject to inspection only insofar as it directly relates to the shareholder’s proper purpose as a shareholder. A respected treatise notes that shareholders “are not entitled to possession of trade secrets and confidential communications unless that information affects the financial status or value of their stock in some way.”[43] Thus, “analyses or tentative studies in the nature of confidential interoffice communications” are generally not within the scope of a shareholder’s inspection right because a shareholder would generally have no proper purpose in inspecting them related to the shareholder’s interests as a shareholder.[44] This proper-purpose protection for confidential information helps to ensure that “the information will not be used to the detriment of the corporation or to give a competitor an unfair advantage.”[45] For example, we find it hard to imagine the proper purpose that a shareholder would have, as a shareholder, to inspect the secret formula for Coca-Cola. Where a corporation has a good cause to doubt a shareholder’s proper purpose,[46] the corporation may refuse to honor the shareholder’s inspection request on that ground and may raise the lack of a proper purpose as a defense to a shareholder’s claim under the statute. Or the corporation may seek declaratory relief as to the shareholder’s improper purpose and lack of entitlement to inspection.

A second well-established tool for protecting against the adverse dissemination of sensitive information is the ability of a court to condition the remedy of compelled disclosure of documents on reasonable confidentiality provisions. In the course of resolving a lawsuit about what information is subject to inspection, a court, exercising its discretion in granting the remedy of mandamus and compelling the production of records, may include reasonable protective orders safeguarding the use and dissemination of sensitive information to ensure that the information to which a shareholder has a right is used only for the shareholder’s proper purpose as a shareholder and does not do damage to the company.[47] For example, a court considering whether to issue a writ of mandamus might order that a neutral third party conduct the inspection of sensitive information,[48] include in the order terms “necessary to prevent a disclosure of the corporation’s trade or business secrets to its competitors,”[49] or provide that the parties “shall enter into such reasonable confidentiality agreement as [the corporation] may request.”[50] In some states, such as Delaware, there is even a presumption that a court will as a matter of course condition its order mandating production of confidential information on reasonable confidentiality protections.[51] But some courts, including the Delaware Court of Chancery, recognize that shareholders must be able to publicly disclose confidential information in at least some circumstances in order to effectuate their proper purposes, such as suing the corporation or its directors or officers for mismanagement, violation of disclosure rules, or for breach of a fiduciary duty.[52]

This case does not involve either of these two confidentiality protections.[53] Rather, it presents the questions when and whether a corporation may make use of a third tool: unilaterally demanding that the shareholder accede to a confidentiality agreement before the corporation releases information. The Corporation in this case demanded, as a precondition to release of any documents, that Pederson accede to confidentiality agreements that would (1) cover all of the information to be released, and (2) either hold Pederson liable for improper disclosures made by other shareholders with whom he might share the information or require Pederson to obtain confidentiality agreements with each shareholder with whom he intended to share the information. The Corporation argues that it is entitled to require such a confidentiality agreement before producing otherwise-inspectable documents. Pederson argues that the proper-purpose requirement and court-imposed remedial conditions are the only ways in which a corporation may protect sensitive information from inspection and that a corporation my not sua sponte demand a confidentiality agreement ex ante and wield refusal to accede as a shield to liability. The superior court held that the Corporation “could request a confidentiality agreement if sensitive materials were requested” so long as the term thereof were “reasonable” and that “the requested confidentiality agreement [was] reasonable.”

It may be appropriate for a corporation to demand a confidentiality agreement provided that it (1) reasonably defines the scope of what is confidential information subject to the agreement and (2) contains confidentiality provisions that are not unreasonably restrictive in light of the shareholder’s proper purpose and the corporation’s legitimate confidentiality concerns.[54] If the shareholder refuses to sign such a confidentiality agreement, the corporation may then refuse to release confidential information and either institute a declaratory action seeking a court order containing reasonable confidentiality protections.[55] or await the shareholder’s exercise of legal options. And if, as in this case, the shareholder believes that the corporation’s proffered confidentiality agreement is not reasonable, the shareholder may refuse to sign and may bring an action against the corporation alleging that the imposition of an unreasonable confidentiality agreement was a constructive denial of an otherwise-proper shareholder inspection demand.[56]

We conclude that the Corporation’s proffered agreements were not reasonable as to the scope of application and the breadth of confidentiality protections.

First, the proffered confidentiality agreements purported to subject “[a]ll” of the information to be released to the terms of the confidentiality agreement, without any attempt to differentiate between confidential and non-confidential information. We conclude that it is unreasonable to designate as confidential all information subject to an inspection request without differentiating between confidential and non-confidential portions of the requested information or explaining why the corporation has good cause to believe that all of the information sought is confidential. There are many cases interpreting the meaning of “confidential information” in the context of a court’s remedial orders pursuant to a shareholder’s inspection demand. In those cases, “confidential information” may include those documents that are “candid” in the sense of being prepared by the corporation with a reasonable expectation of confidentiality;[57] documents that reveal preliminary deliberations, assessments, or speculation rather than final action, decisions, or outcomes;[58] and documents whose confidentiality has actually been maintained.[59] “Confidential information” may exclude at least that information that the shareholder already knew, developed independently, acquired from a third party not under an obligation not to disclose the information, or acquired from the public domain.[60] Because the Corporation’s proffered confidentiality agreements in this case made no attempt to differentiate confidential from non-confidential information on a reasonable basis, we hold that the scope of the agreements was unreasonably broad. In particular, it would be difficult for the Corporation to argue that it has a confidentiality interest in the compensation it pays to its five most highly compensated officials in light of the mandatory disclosure requirements of the pertinent state regulation.[61]

Second, the proffered confidentiality agreements contained unreasonably restrictive confidentiality protections. The first proposed agreement would have permitted disclosure “to other shareholders” and their agents but would have made Pederson liable to the Corporation for unauthorized disclosure by those third parties. The second proposed agreement would have been permitted disclosure to proper third parties but would have required Pederson to “obtain…a confidentiality agreement…that subjects [the person to whom Pederson seeks to disclose confidential information] to the same restrictions imposed on [Pederson] in this Agreement.” The superior court concluded that it was reasonable for the Corporation’s final draft confidentiality agreement to require Pederson to obtain a confidentiality agreement form each shareholder before disseminating confidential information to that shareholder, reasoning that without such protections, the confidentiality agreement would be “a nullity.” But Pederson maintains that the confidentiality restrictions in both drafts were unreasonably restrictive of his proper purpose of organizing this fellow shareholders to alter corporate governance to restrict the transactions that he alleges have occurred.

We conclude that the confidentiality provisions in both the first and second proffered confidentiality agreements were unreasonably restrictive, at least as they related to executive compensation and stock interests, and they would have placed a great burden on Pederson’s exercise of his proper purpose of making use of disclosed information to organize his fellow shareholders to restrict those types of transactions. The marginal benefits of the confidentiality restrictions to the Corporation’s interests in maintaining confidentiality regarding executive compensation did not outweigh those harms.[62] Again, this is particularly true given the state regulation that requires the corporation to disclose the compensation of its five most highly compensated executives.[63]

Accordingly, we reverse the superior court’s contrary findings of fact and conclusions of law regarding the reasonableness of the confidentiality agreements in this case and remand for further proceedings in accordance with this opinion.

V. CONCLUSION

For these reasons, we REVERSE the superior court’s judgment, VACATE the superior court’s findings of fact and conclusions of law, and REMAND for further proceedings consistent with this opinion.

In re Darrell J. Totemoff

ORDER ON MOTION TO DISMISS

On September 12, 2014 the deceased, Darrell J. Totemoff, executed a Chugach Alaska Corporation (“Chugach Alaska”) stock will. In the will, Mr. Totem off identified himself, identified his beneficiaries, and identified the number of shares each beneficiary was to receive. In addition, Mr. Totemoff identified the location at which he executed the will. However, Mr. Totemoff did not have the will notarized. Because the will was not notarized, Chugach Alaska Corporation has refused to honor it.

Petitioners now seek to admit the stock will to probate as a holographic will under AS 13.12.502(b). But under a different statute, AS 13.16.705, the Chugach Alaska Corporation, not a probate court, must determine who receives Mr. Totemoff’s Chugach Alaska stock in the first instance. The stock is not part of the estate and therefore “not subject to probate.” AS 13.16.705(a). If Petitioners disagree with Chugach Alaska’s decision, they may file an independent action with the superior court. Id. Accordingly, Chugach Alaska’s Motion to Dismiss is GRANTED.

Alaska courts interpret the law “according to reason, practicality, and common sense, taking into account the plain meaning and purpose of the law as well as the intent of the drafters.” Native Village of Elim v. State, 990 P.2d 1, 5 (Alaska 1999). “In general, if two statutes conflict, then the later in time controls over the earlier, and the specific controls over the general.”[1] Allen v. Alaska Oil & Gas Conservation Comm’n, 147 P.3d 664, 668 (Alaska 2006). However, the court must interpret potentially conflicting statutes “with a view toward reconciling conflict and producing a harmonious whole.” Id.

Here, AS 13.06.065 establishes the probate jurisdiction of the superior court, while AS 13.16.705 specifically addresses testamentary transfers of Native corporation stock. Under AS 13.06.065, the court has jurisdiction over “estates of decedents, including construction of wills and determination of heirs and successors.” Petitioners claim this provision authorizes the court to admit Mr. Totemoff’s stock will to probate. But AS 13.16.705 provides that the “common stock or other alienable stock” of a Native Corporation is not “subject to probate” and may not be considered “in determining the value of an estate or allowance.” Thus, the statutory language suggests that Mr. Totemoff’s Chugach Alaska stock is not part of the estate. If the stock is not part of the estate, it does not fall within the Court’s probate jurisdiction, which extends only to “estates of decedents.”[2]

The legislative history of AS 13.16.705 supports this interpretation. The Legislature enacted AS 13.16.705 to implement the Alaska Native Claims Settlement Act (ANCSA). ANCSA, which settled various claims by Native Alaskans on aboriginal territory, aimed to ensure the economic well-being of Native communities and preserve the Native Alaskan way of life. See 43 U.S.C. §§ 1601-07. To that end, ANCSA restricted transfers of Native Corporation stock. Id. § 1606. However, ANCSA left the State free to determine how stock would pass upon the death of a shareholder. Id. § 1606(h)(2)(A) (providing that stock in a Native Corporation shall pass “in accordance with the lawful will of [the shareholder] or pursuant to the applicable laws of intestate succession”).

In direct response to the latter aspect of ANSCA, AS 13.16.705(a) unambiguously declares that Native Corporation stock is “not subject to probate” and may not be included in the estate. Instead, the stock should pass by either a testamentary form on the back of the stock certificate, or a separate form that “substantially satisfies” the requirements of the statute and is “distributed to the same extent as the [stock] certificate.” Id. If the stock does not pass by either the stock certificate or an equivalent form, the Native corporation that issued the stock-in this case, Chugach Alaska-must determine who is entitled to the stock based on an affidavit, furnished to the Native corporation or its agent, “showing the right of the person entitled to the stock to receive it.” Id. If the Native corporation accepts the affidavit and transfers the stock, it is “discharged and released to the same extent as if [it] dealt with a personal representative of the decedent.” AS 13.16.685. If the Native corporation refuses to transfer the stock as requested in the affidavit, the party requesting the transfer may file “an independent action in the superior court.” AS 13.16.705(a).

AS 13.16.705 establishes the exclusive procedure for distributing Native Corporation stock upon the death of a shareholder. Contrary to Petitioners’ assertions, AS 13.06.065 – which broadly declares that the court has jurisdiction over “estates of decedents” – does nothing to alter this statutory scheme. As discussed above, Native corporation stock may not be considered “in determining the value of an estate or allowance.” The Native Corporation must decide, in the first instance, who inherits the stock. Because Chugach Alaska has refused to honor Mr. Totemoff’s stock will, it must now dispose of the stock on the basis of an affidavit from the party entitled to receive it. AS 13.16.705(a). In other words, Petitioners must submit an affidavit to Chugach Alaska showing that they are entitled to inherit Mr. Totemoff’s stock. If Petitioners disagree with Chugach Alaska’s subsequent decision, they may tile an action with the Superior Court. Id.

Petitioners argue that the court, not Chugach Alaska, must determine the “validity or lawfulness” of Mr. Totemoff’s stock will. Memorandum in Support of Response to Motion to Dismiss at 6. But there is no need, at this juncture, for a probate court to determine the validity of the will. The Legislature enacted AS 13.16.705, to ensure that the Native community, and not the State, retained primary authority over inheritance of Native corporation stock. See, e.g., Alaska House Judiciary Committee Minutes of the Meeting, Thursday, April 6, 1972, Statements of Rep. Jackson at 162. Thus, the legislature chose to prioritize the legitimacy of inheritance decisions among Native communities over the legal sufficiency of testamentary documents. The Legislature anticipated that many documents purporting to transfer Native Corporation stock after death would not satisfy the requirements for a legally valid will. Id. Nonetheless, AS 13.16.705 demonstrates a clear legislative intent to give effect to such documents. Petitioners’ interpretation of the statutes would render AS 13.16.705 meaningless because disposition of Native Corporation stock would not differ in any significant way from an ordinary probate proceeding.

Because Mr. Totemoff’s Chugach Alaska stock is separate from the estate, Chugach Alaska, and not the court sitting in probate, must decide whether Petitioners are entitled to Mr. Totemoff’s stock. If Petitioners disagree with Chugach Alaska’s decision, they may file and independent action with this court. Chugach Alaska’s Motion to Dismiss is GRANTED.

ORDERED this 26th day of April, 2016, at Anchorage, Alaska.

Andrew Guidi
Superior Court Judge

In re Sitnasuak Native Corporation

The Director of the Department of Commerce, Community, and Economic Development, Division of Banking and Securities (“Administrator”), has conducted an investigation into certain activities of Sitnasuak Native Corporation (“Respondent”), and has determined that Respondent violated certain provisions of the Alaska Securities Act, Alaska Statute (AS) 45.55.

The Administrator had jurisdiction over Respondent and these matters pursuant to the Alaska Securities Act.

Respondent wishes to resolve and settle this matter with the Administrator. As evidenced by the authorized signature on this Order, Respondent consents to the entry of this Order assessing civil penalties based on the Conclusions of Law and Order. Respondent waives its right of appeal under AS 45.55.920(d).

I. Findings of Fact

  1. Respondent is a corporation organized pursuant to the Alaska Native Claims Settlement Act (“ANCSA”), 43 U.S.C. 1601 et seq., and maintains an address at 400 Bering St., Nome, Alaska, 99762.
  2. Pursuant to AS 45.55.139, ANCSA corporations with 500 or more shareholders and total assets exceeding $1,000,000 must file with the Administrator all annual reports, proxies, consents or authorizations, proxy statements, or other proxy solicitations distributed and made available by any person to 30 or more Alaska resident shareholders concurrently with distribution of those materials to shareholders.
  3. Respondent has certified to the Administrator that it has more than 500 shareholders and total assets exceeding $1,000,000.
  4. Pursuant to 3 AAC 08.345(b)(1)(F), Respondent’s board of director proxy solicitations must be preceded or accompanied by a dated, written proxy statement that includes, if action is to be taken on the election of directors, a description of each nominee of the board who has consented to act if elected and of each director whose term of office will continue after the shareholders’ meeting, including a description of the nominee and/or director’s business experience during the last five years, including principal employment or occupation and employer.
  5. On February 28, 2014, Trudy Sobocienski submitted a candidate questionnaire for Respondent’s 2014 board of directors election. In her questionnaire, Ms. Sobocienski disclosed that she had been the Chief Executive Officer of Deloycheet, Inc. from 2010-2012. However, Respondent did not disclose Ms. Sobocienski’s employment with Deloycheet in its 2014 Notice of Annual Meeting & Proxy Statement. Ms. Sobocienski was subsequently elected to the board of directors.
  6. On February 17, 2015, Ms. Sobocienski submitted a current board member questionnaire for Respondent’s 2015 board of directors election. In her questionnaire, Ms. Sobocienski again disclosed that she had been the Chief Executive Officer of Deloycheet, Inc. from 2010-2012. However, Respondent again did not disclose Ms. Sobocienski’s employment with Deloycheet in its 2015 Notice of Annual Meeting & Statement.
  7. Respondent has fully cooperated with the Administrator in its investigation into this matter.

II. Conclusions of Law

  1. Respondent is subject to the filing requirements of AS 45.55.139.
  2. Respondent violated 3 AAC 08.345(b)(1)(F) by failing to disclose Ms. Sobocienski’s employment as Chief Executive Office of Deloycheet, Inc. from 2010-2012 in its 2014 and 2015 Notice of Annual Meeting & Proxy Statements.
  3. Respondent is subject to a civil penalty pursuant to AS 45.55.920(c) because it violated 3 AAC 08.345(b)(1)(F).

III. Order

Pursuant to AS 45.55.920, and on the basis of the Findings of Fact, Conclusions of Law, the Administrator ORDERS Respondent to:

  1. CEASE AND DESIST from omitting mandatory disclosures in its proxy solicitations.
  2. Comply with all provisions of the Alaska Securities Act, including associated regulations.
  3. Pay a civil penalty in the amount of one thousand dollars ($1,000).[1]
IT IS SO ORDERED.

Chris Hladick, Commissioner
Department of Commerce, Community and Economic Development

Dated February 22, 2016
BY: Kevin Anselm, Director
Divisions of Banking and Securities

Consent to Entry of Order

I, Richard Strutz, state that I am the CEO of Sitnasuak Native Corporation (“Sitnasuak”); that I am authorized to act on its behalf; that I have read the foregoing Order and that I know and fully understand the Order contents; that Sitnasuak has been represented by counsel in this matter; that Sitnasuak has been advised of the right of a hearing; that Sitnasuak voluntarily and without any force or duress, consents to the entry of this Order; that Sitnasuak expressly waives any right to a hearing in this matter; that Sitnasuak understands that the Administrator reserves the right to take further actions to enforce this Order or to take appropriate action upon discovery of other violations of the Alaska Securities Act; that further similar violations may result in a prefiling requirement under AS 45.55.920(a)(1)(B); and that Sitnasuak will fully comply with the terms and conditions stated herein.

Sitnasuak understands that this Order is a publicly disclosable document.

Dated 2-9-16
Richard Strutz
Sitnasuak Native Corporation
CEO
SUBSCRIBED AND SWORN TO before me this 9th day of February, 2016 at Sitnasuak NC.
Rebecca Neagle, Notary Public
My commission expires May 8, 2018
Approved as to form and content:
February 17, 2016
Brian Duffy
Attorney for Sitnasuak Native Corporation
Contact Person:
David Newman
Securities Examiner
(907)269-7678

Henrichs et al. vs. Chugach Alaska Corporation

I. Introduction

Robert J. Heinrichs, Derenty Tabios, and Robert E. Burk are shareholders and former directors of Chugach Alaska Corporation who ran for election to the Chugach board in 2005. These former directors sued Chugach because their names were excluded from the board’s corporate proxy materials and because Chugach did not provide them with shareholder information for their own proxy campaigns within the time frame they demanded. The superior court granted Chugach summary judgment on all claims and the former directors now appeal. We affirm because Chugach was not required to deliver the information the former directors demanded and because Chugach’s conduct did not otherwise violate their rights as board candidates.

II. Facts and Proceedings

Chugach is a corporation organized under Alaska law; its principal place of business is in Anchorage. Chugach’s governing body is a nine-person board of directors whose members serve staggered, three-year terms. The shareholders nominate and elect three directors each October at Chugach’s annual shareholders’ meeting.

For each annual meeting, Chugach uses a proxy system that allows shareholders to vote for board directors without attending the meeting in person. Shareholders send written proxies to Chugach’s Inspector of Elections, giving the proxy committee the authority to vote the shareholders’ shares on their behalf. On the proxy, a shareholder indicates the candidate or candidates for which the shareholder wants to vote.

Prior to each meeting, Chugach’s board of directors solicits proxies from the shareholders. Each shareholder receives from the board a proxy statement explaining the proxy system, a voter’s guide providing information about candidates, and a proxy form. The proxy form gives the shareholder the option to vote for a board-endorsed slate of candidates or to allocate votes among candidates of the shareholder’s choice. Submitting an eligible and timely proxy typically makes a shareholder eligible for cash prizes.

The proxy committee of Chugach’s board, composed of the directors not running for reelection, reviews the applications of candidates who wish to be endorsed by the board and included in the proxy materials. It then recommends candidates to the board, which decides whether to endorse the candidates in the proxy materials.

Henrichs and Tabios were members of Chugach’s board of directors leading up to the October 15, 2005 shareholders’ meeting, at which time their seats were set to expire. Each sought reelection. Burk had previously served as a director for Chugach, and he also ran for election.

All three men applied to be board-endorsed candidates. The board rejected their applications and informed them that their names would not be included in Chugach’s corporate proxy material. The board also informed them that they could run as independent candidates and distribute their own proxy materials.

On August 21, 2005, Heinrichs sent a letter to Chugach requesting a list of shareholder addresses and the number of shares owned by each shareholder. Burk and Tabios also sent letters to Chugach requesting the shareholder list. On September 1, after receiving no reply, Henrichs filed suit in the superior court, claiming AS 10.06.430 and AS 10.06.450(d) required Chugach to provide the shareholder information he sought. Tabios joined the suit as a plaintiff five days later on September 6.

On September 7 Chugach emailed to Henrichs, Tabios, and Burk shareholder lists that included the names, the number of shares held, and the addresses for all shareholders. The emails explained that the record date — the date for determining the shareholders entitled to vote at the 2005 annual meeting — was the previous day, and that the shareholders lists were finalized at that time.

Chugach made its first motion for summary judgment on September 9, claiming it had provided all of the information that Henrichs and Tabios requested.

In the meantime, Chugach proceeded with preparations for the 2005 annual meeting. On September 9 Chugach sent out its proxy materials, which did not include the information for Henrichs, Tabios, or Burk. The three men ran independent campaigns: Henrichs and Burk wrote letters to the election inspector asking to inspect the ballots cast at the annual meeting, but the inspector declined, citing the proxy rules that required board approval to inspect the ballots after the adjournment of the meeting.

In December 2005 the former directors filed an amended complaint adding Burk as a plaintiff and adding various challenges to the 2005 election.

The following year, Burk and Henrichs requested shareholder information for the 2006 annual meeting. Their letters requested that Chugach provide the shareholder lists in an electronic file, including each shareholder’s telephone number and email address. In response, Chugach emailed to Burk and Henrichs an electronic spreadsheet containing the names, mailing addresses, number of shares, and voting status of all shareholders. But Chugach declined to provide the shareholders’ telephone numbers and email addresses.

At an August 2006 hearing, the superior court granted Chugach’s first motion for summary judgment. It ruled that Chugach provided the shareholders lists within a reasonable amount of time and that the former directors had not attempted to inspect the shareholder list at the corporation’s registered office or principal place of business as required. The superior court also accepted the former directors’ amended complaint. The former directors then filed another amended complaint, adding claims relating to Chugach’s refusal to provide the shareholders’ email addresses and phone numbers in 2006.

On November 17, 2006, Chugach filed a motion to dismiss all but two of the former directors’ claims. Chugach attached thirteen exhibits to the memorandum in support of the motion. The superior court granted the former directors three extensions of time to file their response. But eventually, the superior court granted the motion — about two months after the third deadline passed without any response and more than a month after Chugach notified the court that the motion was ripe.

The court’s order dismissed all of the former directors’ claims with the exception of one relating to Chugach’s “early bird prize” for prompt proxy returns and another relating to Chugach’s election rule requiring that proxies be separately returned by mail. The court later clarified that it had treated the motion “as a summary judgment motion” even though the motion was labeled as a motion to dismiss. Three days after the motion was granted, the former directors filed a late opposition, attaching 25 exhibits. They also requested reconsideration of the order dismissing their claims, which the court denied.

The court later granted Chugach summary judgment on the two remaining claims and entered a final judgment against the former directors. The former directors now appeal.

III. Discussion

A. Standard of Review

“We review the grant of a summary judgment motion de novo, affirming if the record presents no genuine issue of material fact and if the movant is entitled to judgment as a matter of law.”[1] This de novo standard applies even when the motion is not opposed in the trial court.[2] “The interpretation of a statute is a question of law to which we apply our independent judgment, interpreting the statute according to reason, practicality, and common sense, considering the meaning of the statute’s language, its legislative history, and its purpose.”[3]

B. The Superior Court Did Not Err When It Granted Summary Judgment To Chugach.

The former directors do not identify any disputed issues of fact that precluded summary judgment; instead, they advance numerous legal theories for why Chugach’s conduct surrounding the 2005 and 2006 elections violated their rights. The former directors also argue that the superior court erred in treating Chugach’s motion to dismiss as a summary judgment motion without giving them notice, and in “taking a default against” them because the motion was unopposed.

1. General principles of corporate law

The former directors argue that by favoring the board candidates, Chugach violated fundamental democratic principles established by public election cases[4] and rules of equity that promote fair shareholders’ meetings.[5] But we conclude that we should refer to the Alaska statutes and regulations, and corporate bylaws that more directly relate to the questions raised in this appeal.

The bylaws of a corporation may contain any provision “not in conflict with law or the articles of incorporation,” including “the time, place, and manner of calling, conducting and giving notice of” shareholders’ meetings and “the manner of execution, revocation, and use of proxies.”[6] Article II of Chugach’s bylaws gives the board of directors the authority to conduct shareholders’ meetings and to adopt rules for shareholder meetings, the election of directors, and “the solicitation, filing, and examination of proxies.”

A director of a corporation such as Chugach generally must exercise corporate duties “in good faith, in a manner the director reasonably believes to be in the best interests of the corporation, and with the care, including reasonable inquiry, that an ordinarily prudent person in a like position would use under similar circumstances.”[7]

2. Shareholder list issues

The former directors argue that Chugach failed to provide the shareholder information they sought in 2005 within a reasonable time, violating their right to information as directors under AS 10.06.450(d)[8] and their right to information as shareholders under AS 10.06.430(b).[9] Chugach argues that it provided the information within a reasonable time, two days before it mailed out its own proxy statement and the notice of the annual meeting. The superior court rejected the former directors’ arguments and granted summary judgment to Chugach on two alternative theories: (1) It concluded that Chugach provided the information within reasonable amount of time; and (2) it concluded that the former directors had not “follow[ed] through on their stated intention… to seek to inspect the shareholder list at the place of the registered office or principal place of business.”

Under AS 10.06.430(a), Chugach was required to keep “a record of its shareholders, containing the names and addresses of all shareholders and the number and class of the shares held by each.” And under AS 10.06.430(b), Chugach was required to make that record “reasonably available for inspection and copying” at the corporate office by a shareholder “upon written demand stating within reasonable particularity that purpose of inspection.” Also, under AS 10.06.450(d), any director of Chugach had “the absolute right at a reasonable time to inspect and copy all books, records, and documents of every kind.” Both AS 10.06.430(b) and 10.06.450(d) allow for inspection “in person or by agent or attorney.”

As the superior court noted, the former directors did not seek to inspect the shareholder information at Chugach’s corporate office.[10] The former directors argue that AS 10.06.430(b) and 10.06.450(d) require the corporation to actively deliver the shareholder records to directors or shareholders who request them.

“[T]he threshold question in ascertaining the correct interpretation of a statute is whether the language of the statute is clear or arguably ambiguous.”[11] The language of these statutes is clearly contrary to the former directors’ position. Under AS 10.06.450(d), directors have only the right to “inspect and copy” books, records, and documents. And AS 10.06.430(b) provides shareholders with a right only to “inspection and copying.” There is no mention in either statute of a right to have books, records, or documents delivered — electronically, by mail, or otherwise. The statutes require only that corporations permit directors and shareholders to inspect and copy the records in question.[12]

We therefore do not need to reach the issue of whether the time frame within which Chugach provided the former directors the shareholder information was reasonable. We hold that summary judgment was appropriate on the claims made under AS 10.06.430(b) and 10.06.450(d) because the former directors did not attempt to inspect and copy the 2005 shareholder records as required by these statutes.

The former directors also argue that these statutes required Chugach to provide the shareholders’ phone numbers and email addresses in 2006. Our holding that these statutes only require corporations to permit inspection of corporate records disposes of this argument. But we also note that none of the former directors was a Chugach director in 2006, and that they therefore had no rights under AS 10.06.450(d) at that time. We also note that AS 10.06.430(a) does not require a corporation to keep phone numbers and email addresses in its shareholder record, so AS 10.06.430(b) does not require corporations to permit shareholder inspection of that information.

3. Conversion of the motion to dismiss into a motion for summary judgment

After the superior court had entered summary judgment on the shareholder list issues, Chugach filed a motion asking the court to dismiss all but two of the remaining claims. The motion was labeled as a motion to dismiss, but it was supported by 13 exhibits. The critical exhibits were duplicates of exhibits that had been filed by the former directors in support of their motion for partial summary judgment the previous January. These exhibits included Chugach’s articles of incorporation, its bylaws, its proxy rules, the notice of the 2005 annual meeting, the 2005 voter’s guide, Chugach’s 2005 proxy form, its 2004 annual report, and the former directors’ requests to inspect the election ballots.[13]

The arguments in the motion to dismiss relied on these apparently uncontested exhibits. The essence of Chugach’s arguments was that the legal rules embodied in these corporate documents authorized the board’s actions with respect to the shareholders’ meetings discussed above. The memorandum attached to the motion noted that Alaska Civil Rule 12(b) permitted the court to treat the motion as one for summary judgment, and stated that summary judgment should be entered in favor of Chugach if there was no genuine issue as to any material fact and if Chugach was entitled to judgment as a matter of law.

Several months passed. The former directors submitted three motions for extension of time, but they filed no response to the motion even two months after the deadline they suggested in their final request. On March 27, 2007, the court granted the motion to dismiss on the form provided by Chugach.

Three days after the order of dismissal, the former directors filed an untimely response. Their response referred to the 25 exhibits that they had filed in January 2006, including the main exhibits that Chugach relied on in its motion to dismiss. The former directors also submitted 25 additional exhibits, enclosed with a cover notice that indicated that the exhibits were submitted pursuant to Alaska Civil Rule 56.

In the untimely opposition, the former directors objected to summary judgment and requested additional discovery, but they gave no indication about exactly what discovery they were requesting, nor did they explain what steps they had already taken to conduct discovery.[14] The text of their argument depended on exhibits — the exhibits attached to Chugach’s motion and those attached to the former directors’ response. The response did not include any indication that the former directors controverted the facts stated in the exhibits attached to Chugach’s motion; in fact, the former directors asked the court to consider the exhibits they had filed in January 2006 because they “provide[d] a factual basis for denying the pending motion to dismiss.”

The former directors now argue that the superior court erred in treating Chugach’s motion to dismiss as a summary judgment motion without giving them prior notice, and in “taking a default against” them because the motion was unopposed. Chugach argues that the former directors had adequate notice that the motion to dismiss would be treated as a summary judgment motion, and that the superior court appropriately considered the motion’s merits rather than granting it simply by default.

Alaska Civil Rule 12(b) provides that, on a motion to dismiss, if “matters outside the pleading are presented to and not excluded by the court, the motion shall be treated as one for summary judgment and disposed of as provided by Rule 56.” It further provides that if a motion to dismiss is treated as a summary judgment motion, “all parties shall be given reasonable opportunity to present all material made pertinent to such a motion by Rule 56.”

In other words, the superior court should give the non-moving party advance notice that a motion to dismiss has been converted to a motion for summary judgment so that the party can file an appropriate response.[15] When the superior court decides a motion under Rule 12(b)(6) without stating whether it is considering attached materials, this court has three options: “[W]e may reverse and remand for proper consideration, or we may review the superior court’s decision as if the motion for dismissal had been granted after exclusion of outside materials, or as if summary judgment had been granted after conversion of the motion to dismiss into one for summary judgment.”[16]

In this case, the superior court did not give the former directors any prior notice that it was converting the motion to dismiss into a motion for summary judgment. We must then determine whether that lack of notice prejudiced the former directors when they responded to the motion to dismiss. The critical issue is whether the former directors, as the non-moving party, “could have availed themselves of the opportunity to present evidence to oppose [the] motion if the superior court had expressly invited them to do so.”[17]

As noted above, the former directors told the court they “ha[d] not yet had their discovery” and argued that the court had to give them “an adequate opportunity… to submit additional proofs.” But the former directors filed their own motion for summary judgment on all of their claims — even those disposed of by the superior court’s March 2007 order — in late July 2007, months after they filed their untimely response. The July 2007 motion relied upon the same exhibits they attached to their untimely response to Chugach’s motion to dismiss, including the exhibits they had filed in January 2006. In other words, they produced no new evidence even after they had a full opportunity to conduct discovery. From this we conclude that the former directors would not have submitted additional evidence, even if they had been given an express opportunity to do so.[18]

In this appeal, the former directors have asked us to review substantively most of the issues that the superior court decided in the converted motion to dismiss. As we determine these issues, we consider all of the exhibits that the former directors submitted, including those filed after the superior court entered its order granting Chugach’s motion to dismiss. None of these exhibits raises any material issues of fact precluding summary judgment. Because we conclude that summary judgment was properly granted, the former directors suffered no prejudice from the conversion.

The former directors also argue that the superior court’s written addendum showed that the court entered summary judgment by default because of their failure to file a timely response to Chugach’s motion. Summary judgment should never be granted by default: A motion for summary judgment may be granted only if it is “otherwise appropriate” under Civil Rule 56(c).[19] But the superior court explained that it did not grant the motion by default; the court was convinced that there were no genuine issues of fact and that Chugach was entitled to judgment as a matter of law. We agree with the superior court’s conclusions.

4. Proxy statement issues

The former directors make a number of arguments about the propriety of Chugach’s 2005 proxy statements. They argue that Chugach failed to disclose that the election was contested and omitted the former directors’ names in its proxy materials, thereby violating Alaska law. Chugach argues that it was not required to include the former directors’ names in its proxy literature.

As a corporation under the Alaska Native Claims Settlement Act (ANCSA),[20] Chugach is subject to Alaska’s proxy regulations for ANCSA corporations[21] but not federal proxy regulations. Under the state regulations a proxy statement may not contain any material misrepresentations.[22] Also, a corporate board’s proxy statement must include “a description of each nominee of the board… and of each director whose term of office will continue after the shareholders’ meeting.[23]

Chugach was not required to include the former directors in the proxy statement because the board did not nominate them. And although Henrichs and Tabios were incumbent directors, Chugach was not required to include their names because their terms were scheduled to expire and therefore would not “continue after the shareholders’ meeting.”

The former directors also argue that Chugach’s 2005 proxy statement did not disclose the compensation for the chairman and directors and other financial information about the corporation. The proxy regulations do require a statement of the individual compensation for the five most highly compensated officers.[24] But Chugach’s 2005 proxy statement complied with this regulation, listing the compensation for the corporation’s president and chief executive officer, its chief financial officer, its vice president, its controller, and its director of government services.

The proxy regulations also require a statement of remuneration for all officers and directors as a group “without naming them.”[25] Chugach’s 2005 proxy statement complied with this regulation, stating the “total remuneration distributed or accrued to the 27 officers and directors of [Chugach] and its subsidiaries during the fiscal year.”

The former directors also argue that the proxy statement did not state the net value per share of stock. But a statement of value per share is not required by the proxy regulations.[26] Nonetheless, Chugach provided equivalent information: The proxy statement provided the number of shares outstanding, and the annual report stated the total value of the shareholders’ equity. In summary, the proxy statement complied with all of the applicable proxy regulations regarding notice of compensation and other financial data.

The former directors also argue that Chugach acted illegally when it offered eligibility for early-bird prizes to shareholders who returned their proxies for “any proxy holder or candidate” by September 23, 2005.[27] They argue that this incentive is an illegal “distribution” in violation of various sections of the corporations code that discourage discrimination between holders of shares of the same class and series of stock.[28] They also argue that the prizes were “vote buying” and that the deadline for eligibility was unfair.

A shareholder “distribution” is defined as “the transfer of cash or property… without consideration, whether by ways of dividend of otherwise.”[29] The prizes are not “distributions” under this definition because eligibility for the prizes was granted in exchange for consideration: the early return of a valid proxy.[30]

Chugach’s bylaws authorize this type of incentive (and the corresponding deadline) under the board’s authority to adopt rules for the solicitation of proxies, and the incentive did not favor any candidate.

5. Other shareholders’ meeting claims

The former directors also make a number of arguments in connection with the 2005 shareholders’ meeting. They argue that the staggered terms for Chugach board members were illegal. But staggered terms are expressly permitted by AS 10.06.455(a).[31]

The former directors argue that Chugach “delays its annual meetings so far after the close of its fiscal year that shareholders do not have current financial data with which to evaluate the incumbents.” But there is nothing in the record indicating that Chugach violated the requirements for distribution of its annual report.[32] And the law dealing with the scheduling of shareholders’ meetings provides only that meetings “shall be held at the time as provided in the bylaws.”[33] Chugach’s bylaws provide that the annual meeting will be held on the “second Saturday in October of each year,” and that is when the meeting was held in 2005.

The former directors argue that their right to inspect corporate records included a right to review and inspect the ballots from the election held at the 2005 annual meeting, and that Chugach violated that right. But Chugach’s proxy rules provided that “after adjournment of the annual meeting” the inspector was required to maintain the ballots and to prohibit inspection “except upon written authorization from the Corporation in the form [of] a certified board resolution.” This rule falls within the board’s authority to provide for the election of directors.[34] Henrichs and Burk each wrote letters to the election inspector requesting to inspect the ballots cast at the meeting, but neither sought authorization from the board.

The motion to dismiss we discuss in section III.B.3 above included two claims that the former directors did not separately address in their appeal brief — claims related to a one-day change in the proxy deadline and assertions in Chugach’s supplemental proxy statement. We see no prejudice in the conversion of the motion with respect to these issues. The proxy rules expressly permitted the board of directors to change the time by which proxies were due. The former directors suffered no prejudice from the change in the proxy deadline because the new date conformed to the deadline printed on their own proxy statements.

With respect to the supplemental proxy statement, the former directors alleged in their amended complaint that the statement cast their lawsuit in an unfair light. But in their untimely response to the motion to dismiss, they failed to discuss this issue at all. We have independently reviewed the record and find no issue of fact precluding summary judgment on this claim.

The former directors make various other complaints about Chugach’s conduct regarding the annual meeting. But none of these complaints appears to involve misconduct that violated any provision of Alaska law or the corporate bylaws.

IV. Conclusion

For these reasons we AFFIRM the superior court’s orders granting summary judgment and dismissing the former directors’ claims against Chugach Alaska Corporation.

Stratman vs. Leisnoi, Inc.

I. INTRODUCTION

This litigation has been festering now for over thirty years. It involves a challenge under the Administrative Procedure Act (“APA”) to the 1974 certification of a Native village under the Alaska Native Claims Settlement Act (“ANCSA”). Plaintiff essentially argues that Woody Island did not qualify and should not have been certified as a Native village under ANCSA. Plaintiff seeks to have Leisnoi, Inc., the village corporation for Woody Island, stripped of the status and benefits conferred upon it under ANCSA.[1] Over ten years ago, this Court remanded this dispute to the Interior Board of Land Appeals (“IBLA”) for a belated exhaustion of administrative remedies. The agency review has finally matured from the seed of remand to a final decision by the Secretary of the Interior concluding that Stratman’s challenge was rendered moot by congressional action recognizing the village.

Stratman disagrees with the final disposition of his administrative sojourn and has returned to the Court seeking summary judgment setting aside the Secretary’s original 1974 decision to certify Leisnoi.[2] Defendants meanwhile have been very busy filing seven separate motions to dismiss.[3] Leisnoi has requested oral argument on these motions to dismiss.[4] Koniag has filed a counterclaim alleging violations of a previous settlement agreement.[5] Finally, there are a handful of miscellaneous motions which the Court must address to clean up the docket.[6]

II. BACKGROUND

The facts of this case have been set out on several occasions and are well known to the parties. See, e.g. Stratman v. Watt, 656 F.2d 1321 (9th Cir. 1981); Leisnoi, Inc. v. Stratman, 835 P.2d 1202 (Alaska 1992). The following facts, upon which the Secretary relied, are sufficient for purposes of this Order:

In 1974, the Secretary, on the basis of a determination by the BIA, certified Leisnoi as a Native village under ANCSA in the Koniag region of Alaska and then subsequently conveyed to Leisnoi the surface estate of approximately 160,000 acres of public lands that Leisnoi had selected in satisfaction of its aboriginal land claims. In accordance with the requirements of ANCSA, the subsurface estate of that acreage was conveyed to Koniag Regional Corporation (Koniag)…

In 1976, Omar Stratman (Stratman), a rancher with grazing leases in the area from which Leisnoi was entitled to select its land, sued in Federal court challenging Leisnoi’s status as a Native village eligible for ANCSA benefits. Stratman had not pursued his administrative remedies. The district court dismissed his action, concluding he lacked standing. In 1981, the Court of Appeals for the Ninth Circuit reversed the district court, finding that Stratman had standing based on his recreational interest, and reinstated Stratman’s claim. The court also excused Stratman’s failure to exhaust his administrative remedies because, as a lessor, he was entitled to, but did not, receive actual notice of Leisnoi’s entitlement to the land.

In 1982, Stratman entered an agreement with Koniag, with which Leisnoi had merged, to drop his litigation challenging Leisnoi’s eligibility. The agreement failed, however, after Leisnoi’s merger with Koniag was voided and Leisnoi repudiated the agreement in 1985. In 1994, the Ninth Circuit ordered Stratman’s challenge to Leisnoi’s eligibility reinstated.

In 1995, the district court stayed the litigation. Noting that this appears to be the perfect case to read ripeness and primary jurisdiction together to require that Stratman litigate his challenge to Leisnoi before the agency before he brings it here, the court sent the case to IBLA for consideration of Stratman’s challenge to Leisnoi. The court explained that [remand would] permit the exhaustion of administrative remedies, albeit belated, and give the Court the benefit of the agency’s expertise…

The IBLA rendered its decision on October 29, 2002, three years after the recommended decision by the Administrative Law Judge. The IBLA concluded that it lacked subject matter jurisdiction of the cases, but nonetheless reviewed and endorsed the Administrative Law Judge’s recommended decision and prepared a written “analysis of the legal issues” for the benefit of the district court in obedience to its mandate.

Docket No. 96, Attach. 2 at 2-3 (internal quotation marks and citations omitted).

Although the IBLA decided it lacked jurisdiction, it adopted the Administrative Law Judge’s findings, concluding that Leisnoi did not qualify as a Native village under ANCSA. See Stratman v. Leisnoi, Inc., 157 IBLA 302, 319-20 (2002). Stratman filed this current case in 2002 seeking to have the IBLA decision translated into an order stripping Leisnoi of its status and benefits under ANCSA. See Docket No. 4. The Department of the Interior (“DOI”) however was not finished with the dispute and the Court stayed proceedings pending a final decision by the Secretary of the Interior. Docket No. 34.

On December 20, 2006, the Secretary found the agency had jurisdiction and disapproved the decision of the IBLA, adopting as his final decision the reasoning, analysis and conclusions of a memorandum written by Solicitor Bernhardt. Docket No. 96, Attach. 1. The Secretary’s decision concluded: (1) that the IBLA had jurisdiction over the case; (2) that 43 C.F.R. § 2651.2(a)(5) required the Secretary to review the IBLA decision; and (3) that section 1427 of ANILCA ratified the DOI’s 1974 eligibility determination, thus mooting this case. Docket No. 96, Attach. 2 at 2-4. The Secretary’s decision brought Stratman’s belated administrative appeal to an end and marked the exhaustion of administrative remedies and the resumption of proceedings before this Court.

Plaintiff filed his Third Amended Complaint in February of 2007, essentially renewing his APA challenge to the Secretary’s original 1974 decision to certify Leisnoi as an eligible ANCSA Native village. Docket No. 105. Plaintiff contends that the IBLA decision has superseded the Secretary’s original 1974 decision and is now the final decision binding the parties and the Court. Id. at 11. Accordingly, Plaintiff seeks a judgment affirming the IBLA’s decision and stripping Leisnoi of the status and benefits conferred upon it under ANCSA. Id.

Defendants Leisnoi and Koniag have filed motions to dismiss arguing that congressional ratification of Leisnoi’s status has mooted this controversy. Docket No. 120 (Leisnoi mot.); 121 (Leisnoi mem.); 143 (Koniag mot.); 145 (Koniag mem.); 171 (Stratman opp’n); 198 (Leisnoi reply); 210 (Koniag reply). The Government has filed a memorandum and a reply discussing the merits of the issues. See Docket Nos. 149 (Govt. mem.); 209 (Govt. reply). The Court reviews both motions to dismiss for lack of subject matter jurisdiction under rule 12(b)(1) of the Federal Rules of Civil Procedure.

III. STANDARD OF REVIEW

Under Rule 12(b)(1) of the Federal Rules of Civil Procedure, a defendant may seek to dismiss a complaint for “lack of jurisdiction over the subject matter.” Fed. R. Cov. P. 12(b)(1). When considering a Rule 12(b)(1) motion, the Court is not restricted to the face of the pleadings, but may review any evidence, such as declarations and testimony, to resolve any factual disputes concerning the existence of jurisdiction. See McCarthy v. United States, 850 F.2d 558, 560 (9th cir. 1988). The burden of proof on a Rule 12(b)(1) motion is on the party asserting jurisdiction. See Sopcak v. N. Mountain Helicopter Serv., 52 F.3d 817, 818 (9th Cir. 1995). A reviewing court must presume a lack of jurisdiction until the plaintiff establishes otherwise. See Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). A complaint will be dismissed for lack of subject matter jurisdiction (1) if the case does not “arise under” any federal law or the United States Constitution, (2) if there is no controversy within the meaning of that constitutional term, or (3) if the cause is not one described by any jurisdictional statute. See Baker v. Carr, 369 U.S. 186, 198 (1962).

Federal courts lack subject matter jurisdiction to adjudicate moot issues: “no justiciable controversy is presented… when the question sought to be adjudicated has been mooted by subsequent development.” Flast v. Cohen, 392 U.S. 83, 95 (1968). The Ninth Circuit has found that “to avoid mootness, the court must determine that the issues in a case remain live and that the parties continue to have a legally cognizable interest in the outcome throughout the proceeding.” So. Oregon Barter Fair v. Jackson County, 372 F.3d 1128, 1133 (9th Cir. 2004) (citing City of Erie v. Pap’s A.M., 529 U.S. 277, 287 (2000)). Congressional ratification can render moot a live controversy. See Equal Employ. Opport. Commission v. First Citizens Bank of Billings, 758 F.2d 397, 399-400 (9th Cir. 1985).

IV. DISCUSSION

Section 1427 of ANILCA instructs the Secretary of the Interior to “convey… the surface estate of all of the public lands on Afognak Island” to a joint venture comprised of the “Koniag Deficiency Village Corporations.” Alaska National Interest Lands Conservation Act, Pub. L. No. 96-487, § 1427(b)(1), (c), 94 Stat. 2371, 2519-23 (1980). Leisnoi is specifically enumerated as one of the Koniag deficiency village corporations. Id. at § 1427(a)(4). The conveyance was to be made “in full satisfaction” of, among other things, “the right of each Koniag Deficiency Village Corporation to conveyance under [ANCSA] of the surface estate of deficiency village acreage on the Alaska Peninsula.” Id. at § 1427(b)(1).

Defendants argue that section 1427 of ANILCA ratified the Secretary’s 1974 certification of Leisnoi as a Native village eligible for benefits under ANCSA, consequently rendering moot Stratman’s claim that the 1974 certification was arbitrary and capricious. See Docket Nos. 121 at 8; 145 at 4-9; 149 at 1. They further argue that the Secretary’s interpretation supporting their contention is due deference under Chevron, or Skidmore in the alternative. Stratman argues that no deference is due, and that section 1427 cannot be read as ratifying Leisnoi’s eligibility, or as exempting Leisnoi from the threshold requirements for certification as a Native village. See Docket No. 171 at 6-51.

A. The Secretary’s Interpretation of Section 1427 is Entitled to Deference.

In this case, the question of mootness turns on interpretation of section 1427 of ANILCA. Defendants argue that the Secretary’s interpretation of section 1427 of ANILCA is due deference under Chevron U.S.A. v. Natural Resources Defense Council, 467 U.S. 837 (1984) or alternatively Skidmore v. Swift & Co., 323 U.S. 134 (1944).

In reviewing an agency’s interpretation of a statute the agency administers, a court first looks to see whether “Congress has directly spoken on the precise question.” Chevron U.S.A., 467 U.S. at 843. If Congress has not addressed the specific issue, or if the statute is ambiguous, the question is whether the agency’s interpretation is permissible. Id. Courts accord great deference to the interpretation of a statute by the agency or agencies entrusted with its implementation, and will uphold the agency interpretation so long as it is reasonable. Kunaknana v. Clark, 742 F.2d 1145, 1150 (9th Cir. 1984). To satisfy the reasonableness standard it is not necessary for the court to find that the agency’s construction of the statute is the only reasonable interpretation, or even the reading the court would have reached if the question initially had arisen in a judicial proceeding. Id. Rather, the agency interpretation must merely be within the range of reasonable meanings which the words of the statute permit. See Id. at 1152.

In determining whether to apply Chevron deference, this Court looks to United States v. Mead Corp. 533 U.S. 218 (2001). In Mead, the Supreme Court wrote that such deference is appropriate when circumstances imply that Congress expects the “agency to be able to speak with the force of law when it addresses ambiguity in the statute or fills a space in the enacted law.” Id. at 229. The authority to engage in formal rulemaking or adjudication is a solid indicator of when the authority to speak with the force of law exists. Id.

The Ninth Circuit has repeatedly accorded great deference to the Department of the Interior’s interpretation of ANCSA. See Chugach Alaska Corp. v. Lujan, 915 F.2d 454, 457 (9th Cir. 1990) (according deference to agency’s interpretation of ANCSA eligibility requirements); Seldovia Native Ass’n, Inc., v. Lujan, 904 F.2d 1335, 1342 (9th Cir. 1990); Haynes v. United States, 891 F.2d 235, 238-39 (9th Cir. 1989). Similarly, courts have found that the DOI deserves Chevron deference in its interpretation of ANILCA. See Ninilchik Traditional Council v. United States, 227 F.3d 1186, 1191 (9th Cir. 2000); Alaska v. Babbitt, 72 F.3d 698 (9th Cir. 1995); Native Village of Quinhagak v. United States, 35 F.3d 388, 392 (9th Cir. 1994).

Here, the Secretary of the Interior has interpreted the intersection of section 1427 of ANILCA with the village eligibility requirements of ANCSA. ANILCA makes the relationship clear, placing section 1427 under Title XIV of ANILCA which is entitled “Amendments to the Alaska Native Claims Settlement Act and Related Provisions.” See ANILCA Title XIV, 94 Stat. 2491. Further, section 1427 specifically names the Secretary of the Interior as the government actor who must implement the provisions of the section. ANILCA § 1427(b)(1). The Court is satisfied that Congress expected the DOI to speak with the force of law in resolving ambiguities contained within ANILCA generally, and section 1427 specifically.

Under the first prong of Chevron, the provision interpreted by the agency must be ambiguous. Chevron U.S.A., 467 U.S. at 843. Stratman argues that the Secretary’s interpretation is simply not ambiguous after applying canons of construction. Docket No. 171 at 51-52. As this Court has stated in the past, the question of whether ANILCA ratified Leisnoi’s eligibility is a difficult question. The Secretary demonstrates in his opinion that because Leisnoi’s status was under judicial review at the time ANILCA was passed, it is unclear whether Congress intended section 1427(b)(1) as ratification of Leisnoi’s eligibility, or simply as an acknowledgment that Leisnoi had an entitlement to certain acreage if Stratman’s challenge were unsuccessful. See Docket No. 96, Attach. 2 at 10. Subsection (a)(2) posed a similar ambiguity because Congress appeared to be stating that Leisnoi was entitled to benefits under ANCSA section 14(a), but the eligibility determination was still under review. Id. The differences in opinion on this issue between the IBLA and the Secretary further highlight the ambiguity involved. See Docket No. 96, Attach. 2 at 5-13. The Court is satisfied that it was not clear on the face of the section 1427 whether Congress intended to ratify Leisnoi’s eligibility under ANCSA.

Under the second prong of Chevron, the Secretary’s conclusion that section 1427 ratified the original 1974 eligibility decision must be reasonable. See Chevron U.S.A., 467 U.S. at 843. The Court finds the Secretary’s interpretation of section 1427 not only reasonable, but persuasive.

First, the Secretary based his interpretation on the time-honored canon of reading a statute as a whole. See Docket No. 96, Attach. 2 at 10; Washington State Dep’t of Soc. and Health Servs. v. Keffeler, 537 U.S. 371, 384 n.7 (2003). Read as a whole, the Court agrees that certainty about the status of Leisnoi was a necessary predicate to achieving the finality sought broadly by ANILCA across Alaska, and narrowly by section 1427 in the Koniag region. See Docket No. 96, Attach. 2 at 6-10.

Second, the Secretary applied the canon of statutory construction that “remedial legislation should be construed broadly to effectuate its purposes.” Id. at 11 (quoting Tcherepnin v. Knight, 389 U.S. 332, 336 (1967)). Keeping in mind the background of ANCSA and the specific problems of land selection in the Koniag region, it is more than reasonable to conclude that settling Leisnoi’s eligibility was a necessary predicate to effectuating Congress’ purpose of settling Koniag’s land entitlement quickly and permanently. See Docket No. 96, Attach. 2 at 6-11.

Third, the Secretary looked to the legislative history and demonstrated that Congress was aware of the doubts as to Leisnoi’s eligibility at the time it passed section 1427. Id. at 11-12. The Secretary’s conclusion that awareness implies ratification is bolstered by the fact that Congress dealt separately in section 1427 with other villages whose eligibility was less certain by offering them diminished benefits in settlement of their claims. See ANILCA § 1427(e). If Congress went to all the trouble to settle the status of these other villages, why would Congress leave Leisnoi’s status up to the courts when bringing finality to the land selection process was one of Congress’ chief aims in ANILCA?

The Court concludes that the Secretary’s interpretation was not only permissible, but persuasive. Although the Court finds that the Secretary’s interpretation must be upheld under Chevron deference, the Court notes that it would have come to the same conclusion had it been interpreting the statute in the first instance, or under the persuasive deference standard found in Skidmore.

B. Ratification Moots Stratman’s Claim

Stratman’s challenge is to the Secretary’s 1974 certification of Leisnoi’s eligibility for ANCSA benefits. The Court has concluded that Congress ratified the Secretary’s decision when it enacted section 1427 of ANILCA. It therefore no longer matters whether the Secretary’s original decision was flawless or arbitrary and capricious. With section 1427, Congress effectively decided to overlook any doubts as to Leisnoi’s eligibility or shortcomings in the Secretary’s 1974 determination in order to settle the land selection process in the Koniag region with finality. Stratman’s challenge to the original determination is therefore moot. Regardless of the merits of his central contention, the political branches are now his only recourse.

IT IS THEREFORE ORDERED:

Stratman’s challenge to Leisnoi’s eligibility is moot. As this Court lacks subject matter jurisdiction, the Motion to dismiss at Docket No. 120 is GRANTED. The Motion for extension of time at Docket No. 202 is GRANTED. The Motion for leave to file excess pages at Docket No. 169 is GRANTED. The Motion for oral argument at Docket No. 211 is DENIED as noted supra. The Motions at Docket Nos. 107; 109; 111; 118; 143; 177; 178; 189; 193; 205; and 207 are DENIED as they are now moot. Koniag’s Counterclaim at Docket No. 200 is also DISMISSED as it is now moot.

Dated this 26th day of September 2007.
James Singleton, Jr.
United States District Judge

Yellen v. Confederated Tribes of Chehalis Reservation

Synopsis 

Background: Federally recognized Indian tribes brought actions challenging Treasury Secretary’s announcement that Alaska Native regional and village corporations (ANC) were eligible for emergency aid set aside for tribal governments under Coronavirus Aid, Relief, and Economic Security (CARES) Act. After cases were consolidated, the United States District Court for the District of Columbia, Amit P. Mehta, J., granted summary judgment to government and ANCs. Tribes appealed. The United States Court of Appeals for the District of Columbia Circuit, Katsas, Circuit Judge, 976 F.3d 15, reversed. Certiorari was granted.

The Supreme Court, Justice Sotomayor, held that while ANCs are not federally recognized tribes in a sovereign political sense, they are “Indian tribes” under plain definition in Indian Self-Determination and Education Assistance Act (ISDA), and thus, they are eligible to receive monetary relief under the CARES Act.

Reversed and remanded.

Justice Alito joined in part.

Justice Gorsuch filed a dissenting opinion, in which Justices Thomas and Kagan joined.

Procedural Posture(s): Petition for Writ of Certiorari; On Appeal; Motion for Summary Judgment.

Syllabus[*]

Title V of the Coronavirus Aid, Relief, and Economic Security (CARES) Act allocates $8 billion to “Tribal governments” to compensate for unbudgeted expenditures made in response to COVID–19. 42 U.S.C. § 801(a)(2)(B). The question in these cases is whether Alaska Native Corporations (ANCs) are eligible to receive any of that $8 billion. Under the CARES Act, a “Tribal government” is the “recognized governing body of an Indian tribe” as defined in the Indian Self-Determination and Education Assistance Act (ISDA). §§ 801(g)(5), (1). ISDA, in turn, defines an “Indian tribe” as “any Indian tribe, band, nation, or other organized group or community, including any Alaska Native village or regional or village corporation as defined in or established pursuant to the Alaska Native Claims Settlement Act [(ANCSA),] which is recognized as eligible for the special programs and services provided by the United States to Indians because of their status as Indians.” 25 U.S.C. § 5304(e).

Consistent with the Department of the Interior’s longstanding view that ANCs are Indian tribes under ISDA, the Department of the Treasury determined that ANCs are eligible for relief under Title V of the CARES Act, even though ANCs are not “federally recognized tribes” (i.e., tribes with which the United States has entered into a government-to-government relationship). A number of federally recognized tribes sued. The District Court entered summary judgment for the Treasury Department and the ANCs, but the Court of Appeals for the District of Columbia Circuit reversed.

Held: ANCs are “Indian tribe[s]” under ISDA and thus eligible for funding under Title V of the CARES Act. Pp. 2441 – 2452.

(a) The ANCs argue that they fall under the plain meaning of ISDA’s definition of “Indian tribe.” Respondents ask the Court to adopt a term-of-art construction that equates being “recognized as eligible for the special programs and services provided by the United States to Indians because of their status as Indians” with being a “federally recognized tribe.” Pp. 2441 – 2443.

(1) Under the plain meaning of ISDA, ANCs are Indian tribes. ANCs are “established pursuant to” ANCSA and thereby “recognized as eligible” for that Act’s benefits. ANCSA, which made ANCs eligible to select tens of millions of acres of land and receive hundreds of millions of tax-exempt dollars, 43 U.S.C. §§ 1605, 1610, 1611, is a special program provided by the United States to “Indians,” i.e., Alaska Natives. Given that ANCSA is the only statute ISDA’s “Indian tribe” definition mentions by name, eligibility for ANCSA’s benefits satisfies the definition’s final “recognized-as-eligible” clause. Pp. 2441 – 2443.

(2) Respondents ask the Court to read ISDA’s “Indian tribe” definition as a term of art. But respondents fail to establish that the language of ISDA’s recognized-as-eligible clause was an accepted way of saying “a federally recognized tribe” in 1975, when ISDA was passed. Nor is the mere inclusion of the word “recognized” enough to import a term-of-art meaning. Respondents also fail to show that the language of the recognized-as-eligible clause later became a term of art that should be backdated to ISDA’s passage in 1975. Pp. 2443 – 2447.

(3) Even if ANCs did not satisfy the recognized-as-eligible clause, they would still satisfy ISDA’s definition of an “Indian tribe.” If respondents were correct that only a federally recognized tribe can satisfy that clause, then the best way to read the “Indian tribe” definition would be for the recognized-as-eligible clause not to apply to ANCs at all. Otherwise, despite being prominently “includ[ed]” in the “Indian tribe” definition, 25 U.S.C. § 5304(e), all ANCs would be excluded by a federal-recognition requirement there is no reasonable prospect they could ever satisfy. Pp. 2447 – 2450.

(4) Respondents’ remaining arguments that ANCs are not Indian tribes under ISDA are unpersuasive. They first argue that the ANCs misrepresent how meaningful a role they play under ISDA because the actual number of ISDA contracts held by ANCs is negligible. This point is largely irrelevant. No one would argue that a federally recognized tribe was not an Indian tribe under ISDA just because it had never entered into an ISDA contract. Respondents further argue that treating ANCs as Indian tribes would complicate the administration of ISDA. But respondents point to no evidence of such administrative burdens in the 45 years the Executive Branch has treated ANCs as Indian tribes. Respondents also warn that blessing ANCs’ status under ISDA will give ANCs ammunition to press for participation in other statutes that incorporate ISDA’s “Indian tribe” definition. This concern cuts both ways, as adopting respondents’ position would presumably exclude ANCs from the many other statutes incorporating ISDA’s definition, even those under which ANCs have long benefited. Pp. 2450 – 2451.

(b) One respondent tribe further argues that the CARES Act excludes ANCs regardless of whether they are Indian tribes under ISDA, because ANCs do not have a “recognized governing body.” In the ISDA context, the term “recognized governing body” has long been understood to apply to an ANC’s board of directors, and nothing in either the CARES Act or ISDA suggests that the term places additional limits on the kinds of Indian tribes eligible to benefit under the statutes. Pp. 2447 – 2452.

976 F.3d 15, reversed and remanded.

SOTOMAYOR, J., delivered the opinion of the Court, in which ROBERTS, C.J., and BREYER, KAVANAUGH, and BARRETT, JJ., joined, and in which ALITO, J., joined as to Parts I, II–C, II–D, III, and IV. GORSUCH, J., filed a dissenting opinion, in which THOMAS and KAGAN, JJ., joined.

ON WRITS OF CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR THE DISTRICT OF COLUMBIA CIRCUIT


Attorneys and Law Firms

Elizabeth B. Prelogar, Acting Solicitor General, Counsel of Record, Brian M. Boynton, Acting Assistant Attorney General, Edwin S. Kneedler, Deputy Solicitor General, Matthew Guarnieri, Assistant to the Solicitor General, Michael S. Raab, Daniel Tenny, Adam C. Jed, Attorneys Department of Justice, Washington, DC, for Petitioner.

Riyaz A. Kanji, Counsel of Record, Kanji & Katzen, P.L.L.C., Ann Arbor, MI, Cory J. Albright, Katie E. Jones, Lynsey R. Gaudioso, Kanji & Katzen, P.L.L.C., Seattle, WA, Kannon K. Shanmugam, Paul, Weiss, Rifkind, Wharton, & Garrison LLP, Washington, DC, for Confederated Tribes of the Chehalis Reservation and Tulalip Tribes, for Akiak Native Community, Aleut Community of St. Paul Island, Asa’carsarmiut Tribe, and Houlton Band of Maliseet Indians.

Erin C. Dougherty Lynch, Matthew N. Newman, Wesley James Furlong, Megan R. Condon, Native American Rights Fund, Anchorage, AK, John E. Echohawk, Native American Rights Fund, Boulder, CO, for Arctic Village Council, Native Village of Venetie Tribal Government, Nondalton Tribal Council, and Rosebud Sioux Tribe.

Nicole E. Ducheneaux, Big Fire Law & Policy Group LLP, Bellevue, NE, for Cheyenne River Sioux Tribe.

Lisa Koop Gunn, Senior Attorney, Tulalip Tribes, Tulalip, WA, for Tulalip Tribes.

Harold Chesnin, Lead Counsel for the Tribe Oakville, WA, for Confederated Tribes of the Chehalis Reservation.

Doreen McPaul, Attorney General, Paul Spruhan, Assistant Attorney General, Jason Searle, Navajo Nation Department of Justice, Window Rock, AZ, Richard W. Hughes, Donna M. Connolly, Reed C. Bienvenu, Rothstein Donatelli LLP, Santa Fe, NM, for Pueblo of Picuris, for Navajo Nation.

Bradley G. Bledsoe Downes, General Counsel, Crescent City, CA, for Elk Valley Rancheria, California.

Eric Dahlstrom, April E. Olson, Rothstein Donatelli LLP, Tempe, AZ, Lori Bruner, Quinault Office of the Attorney General, Taholah, WA, for Quinault Indian Nation.

Alexander B. Ritchie, Attorney General, San Carlos Avenue, San Carlos, AZ, for San Carlos Apache Tribe.

Jeffrey S. Rasmussen, Frances C. Bassett, Jeremy J. Patterson, Patterson Earnhart Real Bird & Wilson, Louisville, CO, for Respondent.

Paul D. Clement, Counsel of Record, Erin E. Murphy, Ragan Naresh, Matthew D. Rowen, Kirkland & Ellis LLP, Washington, DC, for Petitioners.


Opinion

Justice SOTOMAYOR delivered the opinion of the Court:[*]

In March 2020, Congress passed the Coronavirus Aid, Relief, and Economic Security (CARES) Act, 134 Stat. 281. Title V of the Act allocates $8 billion of monetary relief to “Tribal governments.” 134 Stat. 502, 42 U.S.C. § 801(a)(2)(B). Under the CARES Act, a “Tribal government” is the “recognized governing body of an Indian tribe” as defined in the Indian Self-Determination and Education Assistance Act (ISDA). §§ 801(g)(5), (1). ISDA, in turn, defines an “Indian tribe” as “any Indian tribe, band, nation, or other organized group or community, including any Alaska Native village or regional or village corporation as defined in or established pursuant to the Alaska Native Claims Settlement Act[,] which is recognized as eligible for the special programs and services provided by the United States to Indians because of their status as Indians.”25 U.S.C. § 5304(e).

The Department of the Treasury asked the Department of the Interior, the agency that administers ISDA, whether Alaska Native Corporations (ANCs) meet that definition. Consistent with its longstanding view, the Interior Department said yes. The Treasury Department then set aside approximately $500 million of CARES Act funding for the ANCs. The question presented is whether ANCs are “Indian tribe[s]” under ISDA, and are therefore eligible to receive the CARES Act relief set aside by the Treasury Department. The Court holds that they are.

I

This is not the first time the Court has addressed the unique circumstances of Alaska and its indigenous population. See, e.g., Sturgeon v. Frost, 587 U.S. ––––, 139 S.Ct. 1066, 203 L.Ed.2d 453 (2019); Sturgeon v. Frost, 577 U.S. 424, 136 S.Ct. 1061, 194 L.Ed.2d 108 (2016); Alaska v. Native Village of Venetie Tribal Government, 522 U.S. 520, 118 S.Ct. 948, 140 L.Ed.2d 30 (1998); Metlakatla Indian Community v. Egan, 369 U.S. 45, 82 S.Ct. 552, 7 L.Ed.2d 562 (1962). The “simple truth” reflected in those prior cases is that “Alaska is often the exception, not the rule.” Sturgeon, 577 U.S. at 440, 136 S.Ct. 1061. To see why, one must first understand the United States’ unique historical relationship with Alaska Natives.

A

When the United States purchased the Territory of Alaska from Russia in 1867, Alaska Natives lived in communities dispersed widely across Alaska’s 365 million acres. In the decades that followed, “[t]here was never an attempt in Alaska to isolate Indians on reservations,” as there had been in the lower 48 States. Metlakatla Indian Community, 369 U.S. at 51, 82 S.Ct. 552. As a consequence, the claims of Alaska Natives to Alaskan land remained largely unsettled even following Alaska’s admission to the Union as our 49th State in 1959.[2] See Alaska Statehood Act, § 4, 72 Stat. 339; Sturgeon, 577 U.S. at 429, 136 S.Ct. 1061.

That changed in 1971 with the Alaska Native Claims Settlement Act (ANCSA). 85 Stat. 688, 43 U.S.C. § 1601 et seq. ANCSA officially dispensed with the idea of recreating in Alaska the system of reservations that prevailed in the lower 48 States. It extinguished Alaska Natives’ claims to land and hunting rights and revoked all but one of Alaska’s existing reservations. § 1610. In exchange, “Congress authorized the transfer of $962.5 million in state and federal funds and approximately 44 million acres of Alaska land to state-chartered private business corporations that were to be formed pursuant to” ANCSA. Native Village of Venetie Tribal Government, 522 U.S. at 524, 118 S.Ct. 948. These corporations are called ANCs.

Relevant here, ANCs come in two varieties: regional ANCs and village ANCs. To form the regional ANCs, the Act directed the Secretary of the Interior to divide Alaska into 12 geographic regions. § 1606(a). Within each region, Alaska Natives were instructed to “incorporate under the laws of Alaska a Regional Corporation to conduct business for profit.” § 1606(d). To form the village ANCs, the Act identified approximately 200 Alaska “Native villages,” a term encompassing any community of 25 or more Alaska Natives living together as of the 1970 census. §§ 1602(c), 1610(b), 1615(a). For each Alaska Native village, ANCSA ordered the “Native residents” to create an accompanying village corporation to “hold, invest, manage and/or distribute lands, property, funds, and other rights and assets for and on behalf ” of the village. §§ 1602(j), 1607(a). ANCSA then directed the Secretary to prepare a roll showing the region and, if applicable, village to which each living Alaska Native belonged. § 1604. Enrolled Alaska Natives then received shares in their respective ANCs. §§ 1606(g), 1607.

B

In 1975, four years after ANCSA’s enactment, Congress passed ISDA. 25 U.S.C. § 5301 et seq. ISDA answered the call for a “new national policy” of “autonomy” and “control” for Native Americans and Alaska Natives. H.R. Doc. No. 91–363, p. 3 (1970); see also Menominee Tribe of Wis. v. United States, 577 U.S. 250, 252, 136 S.Ct. 750, 193 L.Ed.2d 652 (2016) (“Congress enacted [ISDA] in 1975 to help Indian tribes assume responsibility for aid programs that benefit their members”).

ISDA decentralized the provision of federal Indian benefits away from the Federal Government and toward Native American and Alaska Native organizations. ISDA allows any “Indian tribe” to request that the Secretary of the Interior enter into a self-determination contract with a designated “tribal organization.” § 5321(a)(1). Under such a contract, the tribal organization delivers federally funded economic, infrastructure, health, or education benefits to the tribe’s membership.

As originally drafted, ISDA’s “Indian tribe” definition did not mention ANCs. H.R. 6372, 93d Cong., 1st Sess., § 1(a) (1973) (defining “Indian tribe” to mean “an Indian tribe, band, nation, or Alaska Native Community for which the Federal Government provides special programs and services because of its Indian identity”). Prior to passage, however, the definition was amended twice to include, first, Alaska Native villages and, second, ANCs. See H.R. Rep. No. 93–1600, p. 14 (1974) (“The Subcommittee amended the definition of ‘Indian tribe’ to include regional and village corporations established by [ANCSA]”). Today, ISDA defines an “Indian tribe” as “any Indian tribe, band, nation, or other organized group or community, including any Alaska Native village or regional or village corporation as defined in or established pursuant to [ANCSA], which is recognized as eligible for the special programs and services provided by the United States to Indians because of their status as Indians.” § 5304(e).[3]

Despite the express inclusion of ANCs in the definition of “Indian tribe,” a question arose in the Interior Department whether the “recognized-as-eligible clause” limits the definition to “federally recognized tribes” only. A federally recognized tribe is one that has entered into “a government-to-government relationship [with] the United States.” 1 F. Cohen, Handbook of Federal Indian Law § 3.02[3] (N. Newton ed. 2012). This recognition can come in a number of ways: “from treaty, statute, executive or administrative order, or from a course of dealing with the tribe as a political entity.” W. Canby, American Indian Law in a Nutshell 4 (7th ed. 2020). As private companies incorporated under state law, ANCs have never been “recognized” by the United States in this sovereign political sense.

In 1976, the year after ISDA’s enactment, the Interior Department’s Assistant Solicitor for Indian Affairs issued a memorandum on the status of ANCs under ISDA. App. 44–48. In the Assistant Solicitor’s view, the express inclusion of ANCs within the definition of “Indian tribe” confirmed that ANCs are Indian tribes under ISDA, even though they are not federally recognized tribes. In the decades since, the Interior Department has repeatedly reaffirmed that position. See, e.g., 60 Fed. Reg. 9250 (1995) (ANCs “ha[ve] been designated as ‘tribes’ for the purposes of some Federal laws,” including ISDA); 58 Fed. Reg. 54364 (1993) (ANCs “are not governments, but they have been designated as ‘tribes’ for the purposes of ” ISDA); 53 Fed. Reg. 52833 (1988) (ISDA “specifically include[s]” ANCs).

C

In 2020, Congress incorporated ISDA’s “Indian tribe” definition into the CARES Act. 42 U.S.C. § 801(g)(1). Title V of the Act allocates $150 billion to “States, Tribal governments, and units of local government” to compensate for unbudgeted expenditures made in response to COVID–19. § 801(a)(1). Of that $150 billion, $8 billion is reserved for “Tribal governments.” § 801(a)(2)(B). A “Tribal government” is the “recognized governing body of an Indian Tribe,” as ISDA defines the latter term. §§ 801(g)(5), (1).

On April 23, 2020, the Treasury Department determined that ANCs are eligible for CARES Act relief, and set aside more than $500 million for them (since reduced to approximately $450 million). App. 53–54; Letter from E. Prelogar, Acting Solicitor General, to S. Harris, Clerk of Court (May 12, 2021). Soon after the Treasury Department’s announcement, a number of federally recognized tribes (respondents) sued, arguing that only federally recognized tribes are Indian tribes under ISDA, and thus under the CARES Act. Some Tribes further argued that ANCs do not have a “recognized governing body” for purposes of the CARES Act and are ineligible to receive its funding for that reason as well.

The suits were consolidated in the District Court for the District of Columbia, which ultimately entered summary judgment for the Treasury Department and the ANCs. The Court of Appeals for the District of Columbia Circuit reversed. Confederated Tribes of Chehalis Reservation v. Mnuchin, 976 F.3d 15 (2020). In its view, the recognized-as-eligible clause is a term of art requiring any Indian tribe to be a federally recognized tribe. Because no ANC is federally recognized, the court reasoned, no ANC qualifies for funding under Title V of the CARES Act. In so holding, the D. C. Circuit split with the Ninth Circuit, which had held decades prior in Cook Inlet Native Assn. v. Bowen, 810 F.2d 1471 (1987), that ANCs are Indian tribes for ISDA purposes, regardless of whether they have been federally recognized. Id., at 1474.

We granted certiorari, 592 U.S. ––––, 141 S.Ct. 976, 208 L.Ed.2d 510 (2021), to resolve the Circuit split and determine whether ANCs are eligible for the CARES Act funding set aside by the Treasury Department.

II

All but one of the respondent Tribes agree that ANCs are eligible to receive the CARES Act funds in question if they are Indian tribes for purposes of ISDA.[4] The primary question for the Court, then, is whether ANCs satisfy ISDA’s definition of “Indian tribe.” The ANCs ask the Court to answer that question by looking to the definition’s plain meaning. Respondents ask the Court to adopt a term-of-art construction that equates being “recognized as eligible for the special programs and services provided by the United States to Indians” with being a “federally recognized tribe,” i.e., a tribe recognized by the United States in a sovereign political sense.

A

Starting with the plain meaning, an “Indian tribe” under ISDA is a “tribe, band, nation, or other organized group or community, including any Alaska Native village or regional or village corporation as defined in or established pursuant to [ANCSA], which is recognized as eligible for the special programs and services provided by the United States to Indians because of their status as Indians.” 25 U.S.C. § 5304(e). The definition’s first two clauses are straightforward enough. The first lists entities that might count as Indian tribes under the Act (e.g., tribes, bands, nations). The second, “the Alaska clause,” makes clear that Alaska Native villages and ANCs are “includ[ed].” The third, “the recognized-as-eligible clause,” requires more analysis. According to that clause, the listed entities must be “recognized as eligible for the special programs and services provided by the United States to Indians because of their status as Indians.”

ANCs, of course, are “established pursuant to” ANCSA within the meaning of the Alaska clause. They are thereby “recognized as eligible” for ANCSA’s benefits. The trickier question is whether eligibility for the benefits of ANCSA counts as eligibility for “the special programs and services provided by the United States to Indians because of their status as Indians.”

It does. Contrary to the dissent’s view, post, at 2457 – 2458 (opinion of GORSUCH, J.), ANCSA is readily described as a special program provided by the United States to “Indians” (in this case, Alaska Natives). See 43 U.S.C. § 1626 (describing ANCSA’s relationship to “other programs”). The scope of that program is substantial: ANCSA made ANCs eligible to select tens of millions of acres of land and receive hundreds of millions of tax-exempt dollars. §§ 1605, 1610, 1611. Not just a one-time payment, ANCSA provides for revenue sharing among the regional ANCs to ensure Alaska Natives across the State benefit from an ongoing equitable distribution of ANC profits. § 1606(i). ANCSA further entrusts ANCs to “hold, invest, manage and/or distribute lands, property, funds, and other rights and assets for and on behalf ” of Alaska Natives, who are the ANCs’ shareholders, as well as to distribute dividends to them. See §§ 1602(j), 1606(j). Moreover, ANCs and their shareholders are “eligible for the benefits of ” ANCSA, § 1606(d), precisely because of their status as Indians. See § 1626(e)(1) (“For all purposes of Federal law, a Native Corporation shall be considered to be a corporation owned and controlled by Natives”); note following § 1601, p. 1136 (ANCSA is “ ‘Indian legislation enacted by Congress pursuant to its plenary authority under the Constitution of the United States to regulate Indian affairs’ ”).

Respondents do not deny that the benefits of ANCSA are “a” special program or service provided by the United States to Indians. According to respondents, however, such benefits are not “the” special programs and services provided to Indians (e.g., healthcare, education, and other social services provided by federal agencies like the Bureau of Indian Affairs and the Indian Health Service). “The” special programs and services, respondents assert, are available only to federally recognized tribes (or, more precisely, to members of such tribes). In respondents’ view, ANCs are thus “includ[ed]” in the “Indian tribe” definition’s Alaska clause only to be excluded en masse from that definition by the recognized-as-eligible clause.

That would certainly be an odd result. Fortunately, the text does not produce it. ISDA’s “Indian tribe” definition does not specify the particular programs and services an entity must be eligible for to satisfy the recognized-as-eligible clause. Given that ANCSA is the only statute the “Indian tribe” definition mentions by name, the best reading of the definition is that being eligible for ANCSA’s benefits by itself satisfies the recognized-as-eligible clause.

Consider a similarly worded example. A doctor recommends getting a blood test every six months to “any child, adult, or senior, including anyone over the age of 75 whose blood-sugar levels have tested in the prediabetic range within the last five years, who exhibits the warning signs of Type 2 diabetes.” Without further context, it is unclear exactly which warning signs the doctor is referring to, or how many of those signs a child, adult, or senior must exhibit before warranting biannual testing. But it is fair to say that individuals over 75 with prediabetic blood-sugar levels within the last five years should get tested biannually, even if they exhibit no other warning signs. By expressly “including” individuals with that one warning sign, the doctor’s recommendation makes clear that particular sign, by itself, is warning enough.

Just so here: Congress’ express inclusion of ANCs “established pursuant to [ANCSA]” confirms that eligibility for ANCSA’s benefits alone is eligibility enough to be an Indian tribe. ANCs thus satisfy ISDA’s Indian tribe definition, regardless of whether they and their shareholders are eligible for federal Indian programs and services other than those provided in ANCSA. At any rate, the one-to-one relationship respondents posit between membership in a federally recognized tribe and eligibility for federal Indian benefits more broadly does not hold in the unique circumstances of Alaska. See Letter from E. Prelogar, Acting Solicitor General, to S. Harris, Clerk of Court (Apr. 22, 2021) (“[T]he federal government has historically provided benefits and services to Alaska Natives who are not enrolled members of a federally recognized Indian tribe”); D. Case & D. Voluck, Alaska Natives and Americans Laws 30 (3d ed. 2012) (“[T]he federal government has, at least since the end of the nineteenth century, provided a wide variety of programs and services to Alaska Natives solely because of their status as Natives”). So ANCSA is not, in fact, the only federal Indian program or service for which ANCs and their shareholders are eligible.

It should come as no surprise that Congress made ANCs eligible to contract under ISDA. After all, Congress itself created ANCs just four years earlier to receive the benefits of the Alaska land settlement on behalf of all Alaska Natives. Allowing ANCs to distribute federal Indian benefits more broadly is entirely consistent with the approach Congress charted in ANCSA. Accord, 1 American Indian Policy Review Comm’n, Final Report, 95th Cong., 1st Sess., 495 (Comm. Print 1977) (ANCs “might well be the form or organization best suited to sponsor certain kinds of federally funded programs” in Alaska); 43 U.S.C. § 1606(r) (“The authority of a Native Corporation to provide benefits … to promote the health, education, or welfare of … shareholders or family members is expressly authorized and confirmed”).

Under the plain meaning of ISDA, ANCs are Indian tribes, regardless of whether they are also federally recognized tribes. In so holding, the Court does not open the door to other Indian groups that have not been federally recognized becoming Indian tribes under ISDA. Even if such groups qualify for certain federal benefits, that does not make them similarly situated to ANCs. ANCs are sui generis entities created by federal statute and granted an enormous amount of special federal benefits as part of a legislative experiment tailored to the unique circumstances of Alaska and recreated nowhere else. Moreover, with the exception of Alaska Native villages (which are now federally recognized), no entities other than ANCs are expressly “includ[ed]” by name in ISDA’s “Indian tribe” definition. Cf. Sturgeon, 577 U.S. at 440, 136 S.Ct. 1061 (“All those Alaska-specific provisions reflect the simple truth that Alaska is often the exception, not the rule”).

B

Respondents urge this Court to discard the plain meaning of the “Indian tribe” definition in favor of a term-of-art construction. In respondents’ view, the 69 words of the “Indian tribe” definition are a long way of saying just 8: An “Indian tribe” means a “federally recognized tribe.” If that is right, respondents are correct that ANCs are not Indian tribes, because everyone agrees they are not federally recognized tribes. To prevail on this argument, however, respondents must demonstrate that the statutory context supports reading ISDA’s “Indian tribe” definition as a term of art rather than according to its plain meaning. See Johnson v. United States, 559 U.S. 133, 139, 130 S.Ct. 1265, 176 L.Ed.2d 1 (2010). Their efforts are not persuasive.

In arguing for a term-of-art construction, respondents first rely on a series of Acts that terminated various tribes starting in the late 1950s. Those Acts closed tribal membership rolls, specified the division of tribal assets, and revoked tribal constitutions. See, e.g., Act of Sept. 21, 1959, Pub. L. No. 86–322, 73 Stat. 592. Following termination, the tribe and its members were no longer “entitled to any of the special services performed by the United States for Indians because of their status as Indians.” § 5, id., at 593. As respondents note, this language resembles (although does not mirror precisely) the final words of ISDA’s recognized-as-eligible clause. If being terminated means no longer being “entitled to any of the special services performed by the United States for Indians because of their status as Indians,” the argument goes, then being “recognized as eligible for the special programs and services provided by the United States to Indians because of their status as Indians” means being a federally recognized tribe.

Respondents misjudge the relevance of these termination statutes. Those statutes do not contain the words “recognized as eligible”; they do not even contain the word “recognized.” Furthermore, the termination statutes use their ISDA-reminiscent phrasing not as a synonym for termination but to describe just one, among other, consequences of a tribe’s constitution being revoked. See, e.g., ibid. (“The constitution of the tribe … shall be revoked by the Secretary. Thereafter, the tribe and its members shall not be entitled to any of the special services performed by the United States for Indians because of their status as Indians, all statutes of the United States that affect Indians because of their status as Indians shall be inapplicable to them, and the laws of the several States shall apply to them in the same manner they apply to other persons or citizens within their jurisdiction”).

Some linguistic similarity between ISDA and the termination statutes does not suggest that the language of the recognized-as-eligible clause was an accepted way of saying “a federally recognized tribe” in 1975. It instead supports a much more limited proposition: A federally recognized tribe that has not been terminated is “entitled” to “special services performed by the United States for Indians,” and thereby satisfies ISDA’s similarly worded recognized-as-eligible clause. But of course, no one disputes that being a federally recognized tribe is one way to qualify as an Indian tribe under ISDA; it is just not the only way.

Nor is the mere inclusion of the word “recognized” enough to give the recognized-as-eligible clause a term-of-art meaning. True, the word “recognized” often refers to a tribe with which the United States has a government-to-government relationship (particularly when it is sandwiched between the words “federally” and “tribe”). That does not mean, however, that the word “recognized” always connotes political recognition.[5]

“Recognized” is too common and context dependent a word to bear so loaded a meaning wherever it appears, even in laws concerning Native Americans and Alaska Natives. Cf. Bruesewitz v. Wyeth LLC, 562 U.S. 223, 235, 131 S.Ct. 1068, 179 L.Ed.2d 1 (2011) (declining to read “unavoidable” as a term of art in part because “ ‘[u]navoidable’ is hardly a rarely used word”). Certainly, “recognized” can signify political recognition; it can also refer to something far more pedestrian. See, e.g., Black’s Law Dictionary 1436 (rev. 4th ed. 1968) (defining “recognition” as “[r]atification; confirmation; an acknowledgment that something done by another person in one’s name had one’s authority”). The type of recognition required is a question best answered in context. See, e.g., 25 U.S.C. § 3002(a)(2)(C)(1) (providing for control over certain cultural items “in the Indian tribe that is recognized as aboriginally occupying the area in which the objects were discovered”); § 4352(3) (defining a “Native Hawaiian organization” as a nonprofit that, among other things, “is recognized for having expertise in Native Hawaiian culture and heritage, including tourism”). In ISDA, the required recognition is of an entity’s eligibility for federal Indian programs and services, not a government-to-government relationship with the United States.[6]

Respondents next rely on sources that postdate ISDA. Ordinarily, however, this Court reads statutory language as a term of art only when the language was used in that way at the time of the statute’s adoption. See Food Marketing Institute v.Argus Leader Media, 588 U.S. ––––, ––––, 139 S.Ct. 2356, 2365, 204 L.Ed.2d 742 (2019) (rejecting a term-of-art reading where the parties “mustered no evidence that the terms of ” the statute carried a “specialized common law meaning … at the time of their adoption”). In relying on sources postdating ISDA, respondents must show not only that the language of the recognized-as-eligible clause later became a term of art, but also that this term-of-art understanding should be backdated to ISDA’s passage in 1975. They cannot make that showing.

Respondents lean most heavily on the Federally Recognized Indian Tribe List Act of 1994 (List Act), enacted almost 20 years after ISDA. See 25 U.S.C. §§ 5130, 5131. The List Act requires the Secretary of the Interior to publish an annual list of “all Indian tribes which the Secretary recognizes to be eligible for the special programs and services provided by the United States to Indians because of their status as Indians.” § 5131(a). According to respondents, ANCs’ absence from the Secretary’s list confirms that they are not “eligible for the special programs and services provided by the United States to Indians because of their status as Indians,” § 5304(e), and thus fail ISDA’s recognized-as-eligible clause.

Respondents’ cross-referencing argument, however, requires the Court to ignore the reason why ANCs are not on the list. True to its full name, the Federally Recognized Indian Tribe List Act tasks the Secretary with maintaining a “ ‘list of federally recognized tribes’ ” only. Note following § 5130, p. 678. The List Act, moreover, lacks language like that in ISDA expressly “including” ANCs “established pursuant to” ANCSA. § 5304(e). The obvious inference, then, is that ANCs are not on the Secretary’s list simply because they are not federally recognized.

History confirms as much. In 1979, 15 years before the List Act was passed, the Secretary began publishing a list of Indian tribes “that have a government-to-government relationship with the United States.” 44 Fed. Reg. 7235. In 1988, ANCs were added to the Secretary’s list, which had been retitled “Indian Entities Recognized and Eligible To Receive Services From the United States Bureau of Indian Affairs,” because ANCs are “specifically eligible for the funding and services of the [Bureau of Indian Affairs] by statute” and “should not have to undertake to obtain Federal Acknowledgement” (i.e., federal recognition). 53 Fed. Reg. 52829, 52832. In 1993, the Secretary dropped ANCs from the list, concluding that “the inclusion of ANC[s], which lack tribal status in a political sense, called into question the status” of the other entities on the list. 58 Fed. Reg. 54365. In so doing, the Secretary reaffirmed that ANCs “are not governments, but they have been designated as ‘tribes’ for the purposes of some Federal laws,” including ISDA. Id., at 54364. The List Act, passed the following year, “confirmed the Secretary’s authority and responsibility” to maintain a list of federally recognized tribes. 60 Fed. Reg. 9251. Hence, ANCs remained off the list.

To accept respondents’ argument, then, the Court would need to cross-reference ISDA’s definition of an “Indian tribe” with the Secretary’s list, but ignore why ANCs were excluded from that list in the first place. The Court declines to take that doubtful step.

Despite asking the Court to consider post-ISDA statutes to determine whether ANCs are “Indian tribes” under ISDA, moreover, respondents largely fail to address post-ISDA congressional actions that contradict their position. First, consider Congress’ treatment of the Cook Inlet Region, Inc. (CIRI), the regional ANC for the ANCSA region covering more than half the Alaskan population. See The Twelve Regions, ANCSA Regional Association (June 1, 2021), https://ancsaregional.com/the-twelve-regions. In 1994, CIRI contracted under ISDA through its designated healthcare provider to offer healthcare benefits to Alaska Natives and American Indians in Anchorage and the Matanuska-Susitna Valley. See Cook Inlet Treaty Tribes v. Shalala, 166 F.3d 986, 988 (CA9 1999). A group of Alaska Native villages sued, arguing that the Federal Government should have first obtained their approval. Ibid.; see 25 U.S.C. § 5304(l) (“[I]n any case where [an ISDA contract] benefit[s] more than one Indian tribe, the approval of each such Indian tribe” is required). Congress mooted the dispute by passing a bill that waived ISDA’s normal tribal approval requirement for CIRI’s healthcare contracts. Department of the Interior and Related Agencies Appropriations Act, 1998, § 325(a), 111 Stat. 1597–1598. In so doing, Congress not only assumed CIRI was eligible to enter into ISDA contracts (notwithstanding its lack of federal recognition), but actively cleared the way for it to do so.

Next, consider the Native American Housing Assistance and Self-Determination Act of 1996 (NAHASDA), 25 U.S.C. § 4101 et seq., which incorporates ISDA’s “Indian tribe” definition, see § 4103(13)(B). NAHASDA creates a housing block grant program for Indian tribes. § 4111. The regional ANCs (acting through their designated housing authorities) are among the largest recipients of these grants in Alaska, receiving tens of millions of dollars each year. See Dept. of Housing and Urban Development, FY 2020 Final [Indian Housing Block Grant] Funding by [Tribally Designated Housing Entities] & Regions. For years, Congress has passed appropriations riders requiring that the existing recipients of NAHASDA’s housing block grants in Alaska (including ANCs) continue to receive those grants. See, e.g., Further Consolidated Appropriations Act, 2020, Pub. L. 116–94, Div. H, Tit. II, § 211, 133 Stat. 3003. Following the D. C. Circuit’s decision in this case, Congress awarded additional grants under NAHASDA and emphasized that, “[f]or the avoidance of doubt,” the “Indian tribe[s]” eligible for those grants “shall include Alaska native corporations established pursuant to” ANCSA. Consolidated Appropriations Act, 2021, Pub. L. 116–260, Div. N, Tit. V, Subtit. A, § 501(k)(2)(C), 134 Stat. 2077.

Thus, post-ISDA sources prove no more fruitful to respondents than pre-ISDA ones. Even assuming the Court should look to events after 1975, respondents cannot cherry-pick statutes like the List Act without explaining postenactment developments that undermine their interpretation. In the end, the various statutes cited do not support respondents’ efforts to exclude ANCs from ISDA by use of a term-of-art construction.[7]

C

Even if ANCs did not satisfy the recognized-as-eligible clause, however, they would still satisfy ISDA’s definition of an “Indian tribe.” If respondents were correct that only a federally recognized tribe can satisfy that clause, then the best way to read the “Indian tribe” definition as a whole would be for the recognized-as-eligible clause not to apply to the entities in the Alaska clause at all (i.e., to “any Alaska Native village or regional or village corporation,” 25 U.S.C. § 5304(e)). On this reading, the way to tell whether a tribe, band, nation, or other organized group or community is an “Indian tribe” is to ask whether it is federally recognized, but the way to tell whether an Alaska Native village or corporation is an “Indian tribe” is to ask whether it is “defined in or established pursuant to” ANCSA. Ibid. Otherwise, despite being prominently “includ[ed]” in the “Indian tribe” definition, ibid., all ANCs would be excluded by a federal-recognition requirement there is no reasonable prospect they could ever satisfy.

Respondents object (and the dissent agrees) that this construction “produces grammatical incoherence.” Brief for Respondents Confederated Tribes of Chehalis Reservation et al. 16; post, at 2454 – 2455. They point out that a modifying clause at the end of a list (like the recognized-as-eligible clause) often applies to every item in the list. See, e.g., Jama v. Immigration and Customs Enforcement, 543 U.S. 335, 344, n. 4, 125 S.Ct. 694, 160 L.Ed.2d 708 (2005). The so-called series-qualifier canon can be a helpful interpretive tool, and it supports the idea that the recognized-as-eligible clause applies to every type of entity listed in the “Indian tribe” definition, including ANCs. Given that the entities in the Alaska clause are the closest in proximity to the recognized-as-eligible clause, that canon arguably applies with particular force here.

As the Court reiterated earlier this Term, however, the series-qualifier canon gives way when it would yield a “contextually implausible outcome.” Facebook, Inc. v. Duguid, 592 U.S. ––––, ––––, 141 S.Ct. 1163, 1171, 209 L.Ed.2d 272 (2021); see also id., at ––––, 141 S.Ct. at 1173 (ALITO, J., concurring in judgment) (noting that “[c]anons are useful tools, but it is important to keep their limitations in mind. This may be especially true with respect to … the ‘series-qualifier’ canon”). The most grammatical reading of a sentence in a vacuum does not always produce the best reading in context. See, e.g., Sturgeon, 577 U.S. at 438, 136 S.Ct. 1061 (“Statutory language ‘cannot be construed in a vacuum. It is a fundamental canon of statutory construction that the words of a statute must be read in their context and with a view to their place in the overall statutory scheme’ ”); cf. B. Garner, Modern English Usage 784 (4th ed. 2016) (noting the “increasingly common” “ ‘remote relative,’ ” i.e., the practice of separating “the relative pronoun (that, which, who) from its antecedent”).

Consider an example with the same syntax as the “Indian tribe” definition. A restaurant advertises “50% off any meat, vegetable, or seafood dish, including ceviche, which is cooked.” Say a customer orders ceviche, a Peruvian specialty of raw fish marinated in citrus juice. Would she expect it to be cooked? No. Would she expect to pay full price for it? Again, no. Under the reading recommended by the series-qualifier canon, however, the ceviche was a red herring. Even though the 50%-off sale specifically named ceviche (and no other dish), it costs full price because it is not cooked. That conclusion would make no sense to a reasonable customer.

Like applying a “cooked” requirement to ceviche, applying a “federally recognized” requirement to ANCs is implausible in context. When Congress enacted ISDA in 1975, not a single Alaska Native village or ANC had been recognized for a government-to-government relationship with the United States. On respondents’ reading, then, the entire Alaska clause originally had no effect. None of its entities qualified as Indian tribes for purposes of ISDA, even though the only entities expressly included in ISDA’s definition of an “Indian tribe” are those in the Alaska clause.

The only explanation respondents offer for this highly counterintuitive result is that Congress included Alaska Native villages and corporations in the “Indian tribe” definition on the possibility they might one day become federally recognized. That is highly unlikely. First, the Alaska clause would be redundant on that account. See Brief for Respondents Confederated Tribes of Chehalis Reservation et al. 31 (“[T]he Alaska [clause] is … best read as redundant”). A federally recognized Alaska Native village or ANC would presumably already fit into one of the pre-existing ISDA categories of “tribe[s], band[s], nation[s], or other organized group[s] or communit[ies].” 25 U.S.C. § 5304(e).

Second, it is quite doubtful that anyone in 1975 thought the United States was going to recognize ANCs as sovereign political entities. ANCs are for-profit companies incorporated under state law that Congress itself created just four years prior to ISDA. They are not at all the type of entities normally considered for a government-to-government relationship with the United States. Accord, 25 CFR § 83.4 (1994) (“The Department will not acknowledge,” i.e., federally recognize, “[a]n association, organization, corporation, or entity of any character formed in recent times unless the entity has only changed form by recently incorporating or otherwise formalizing its existing politically autonomous community”). Indeed, at the time ISDA was enacted, some doubted whether even Alaska Native villages could be federally recognized.[8]

Respondents counter by pointing to certain organizations created in Alaska in the 1930s that later became federally recognized tribes. One such organization, the Hydaburg Cooperative Association (HCA), was formed under the 1936 Amendment to the Indian Reorganization Act, which authorized Alaska Natives groups “not heretofore recognized as bands or tribes” to organize based on “a common bond of occupation, or association, or residence.” Ch. 254, 49 Stat. 1250 (codified at 25 U.S.C. § 5119). The HCA organized around “a common bond of occupation in the fish industry.” Constitution and By-Laws of the Hydaburg Cooperative Association, Alaska Preamble (1938). Decades later, the Interior Department acknowledged the HCA as a federally recognized tribe, even though it is of fairly recent vintage and organized around a bond of occupation rather than solely around an ancestral tribal heritage. See 58 Fed. Reg. 54369. If the HCA could be federally recognized, respondents say, some might have thought ANCs could too.

Respondents make too much of the HCA and the small handful of entities like it, which are not comparable to ANCs. Unlike ANCs, the former entities were organized under federally approved constitutions as part of a short-lived attempt to recreate in Alaska a tribal reservation system like that in the lower 48 States. ANCs, by contrast, were incorporated under state law pursuant to legislation that embodied the formal repudiation of that approach. That the Interior Department deemed the HCA and a handful of other entities like it federally recognized tribes decades after ISDA’s passage does not mean it was plausible in 1975 to think ANCs would one day become federally recognized tribes, as well.[9]

Ultimately, respondents resort to the argument that, although the idea of ANCs becoming federally recognized tribes might be farfetched, it is not technically impossible. That is, Congress’ plenary power over Indian affairs could conceivably permit it to recognize a government-to-government relationship between an ANC and the United States. Perhaps, but possibility is not the same as plausibility, and both are proper concerns of statutory interpretation. Consider again the example of a restaurant advertising “50% off any meat, vegetable, or seafood dish, including ceviche, which is cooked.” On respondents’ logic, because the restaurant technically could cook its ceviche, the only way to read the advertisement is that ceviche is full price unless the restaurant takes an unexpected culinary step.

That is wrong. The best reading of the advertisement is that ceviche is 50% off even if it is not cooked, just as the best reading of ISDA is that ANCs are Indian tribes even if they are not federally recognized. Any grammatical awkwardness involved in the recognized-as-eligible clause skipping over the Alaska clause pales in comparison to the incongruity of forever excluding all ANCs from an “Indian tribe” definition whose most prominent feature is that it specifically includes them.

D

Respondents make a few final arguments to persuade the Court that ANCs are not Indian tribes under ISDA. None succeeds.

Respondents argue first that the ANCs misrepresent how meaningful a role they play under ISDA because the actual number of ISDA contracts held by ANCs is negligible. The Court does not have the record before it to determine the exact number and nature of ISDA contracts held by ANCs or their designees, either historically or currently. The point is largely irrelevant, however. No one would argue that a federally recognized tribe was not an Indian tribe under ISDA just because it had never entered into an ISDA contract. The same is true for ANCs. To the extent respondents argue that ruling for them would be of little practical consequence given the small number of ISDA contracts held by ANCs, quantity is not the only issue. For example, CIRI contracts through a designee to provide healthcare to thousands of Alaska Natives in Anchorage and the Matanuska-Susitna Valley. Brief for CIRI as Amicus Curiae 9. The loss of CIRI’s ability alone to contract under ISDA would have significant effects on the many Alaska Natives it currently serves.[10]

Respondents further argue that treating ANCs as Indian tribes would complicate the administration of ISDA. If an ISDA contract will benefit multiple Indian tribes, each such tribe has to agree to the contract before it can go into effect. 25 U.S.C. § 5304(l). Because membership in ANCs and federally recognized tribes often overlap, respondents argue that ANCs will be able to veto any ISDA contract sought by a federally recognized tribe in Alaska.

Without discounting the possibility of administrative burdens, this concern is overstated. The Executive Branch has treated ANCs as Indian tribes for 45 years, yet respondents point to no evidence of such a problem ever having arisen. If such a problem does arise, moreover, the Interior Department may be able to craft an administrative solution. Cf. 46 Fed. Reg. 27178, 27179 (1981) (Indian Health Service regulations establishing an “order of precedence” among Alaskan entities “[f]or the purposes of contracting under” ISDA and requiring authorizing resolutions from “[v]illages, as the smallest tribal units under” ANCSA).

Respondents also warn that blessing ANCs’ status under ISDA will give them ammunition to press for participation in the many statutes besides the CARES Act that incorporate ISDA’s “Indian tribe” definition. See, e.g., Indian Health Care Improvement Act, § 4(d), 90 Stat. 1401; Native American Housing Assistance and Self-Determination Act of 1996, § 4(12)(B), 110 Stat. 4019–4020; Indian Tribal Energy Development and Self-Determination Act of 2005, [Title V of the Energy Policy Act of 2005], § 503(a), 119 Stat. 764–765.

As the Government notes, however, there may well be statutes that incorporate ISDA’s “Indian tribe” definition but exclude ANCs from participation in other ways. See Brief for Federal Petitioner 33–34 (citing, e.g., 7 U.S.C. §§ 1639o(2), 1639p(a)(1) (defining “Indian tribe” to incorporate the ISDA definition, but also requiring participants to exercise “ ‘regulatory authority over … territory of the Indian tribe’ ”)). Moreover, this concern cuts both ways. If respondents’ reading prevailed, ANCs would presumably be excluded from all other statutes incorporating ISDA’s definition, even those under which ANCs have long benefited. That includes the Indian Tribal Energy Development and Self-Determination Act of 2005, under which ANCs have received millions of dollars of energy assistance. See Brief for Federal Petitioner 33. That also includes NAHASDA, which, as discussed, creates a housing block grant program under which the regional ANCs are some of the biggest recipients in Alaska. See supra, at 2446 – 2447. Currently, over 10,000 Alaskans live in housing units built, improved, or managed by these regional authorities. See Brief for Association of Alaska Housing Authorities as Amicus Curiae 15.

All told, the Court’s decision today does not “vest ANCs with new and untold tribal powers,” as respondents fear. Brief for Respondents Confederated Tribes of Chehalis Reservation et al. 54. It merely confirms the powers Congress expressly afforded ANCs and that the Executive Branch has long understood ANCs to possess.

III

Almost everyone agrees that if ANCs are Indian tribes under ISDA, they are eligible for funding under Title V of the CARES Act. If Congress did not want to make ANCs eligible for CARES Act funding, its decision to incorporate ISDA’s “Indian tribe” definition into the CARES Act would be inexplicable. Had Congress wished to limit CARES Act funding to federally recognized tribes, it could simply have cross-referenced the List Act instead, as it had in numerous statutes before.[11] Instead, Congress invoked a definition that expressly includes ANCs (and has been understood for decades to include them). Today’s ruling merely gives effect to that decision.

Nevertheless, the Ute Indian Tribe of the Uintah and Ouray Reservation argues that the CARES Act excludes ANCs regardless of whether they are Indian tribes under ISDA. Recall that the CARES Act allocates money to “Tribal governments.” 42 U.S.C. § 801(a)(2)(B). A “Tribal government” is “the recognized governing body of an Indian tribe.” § 801(g)(5). According to the Utes, ANCs do not have a “recognized governing body” because that term applies to the governing body of a federally recognized tribe alone.

As the Utes implicitly acknowledge, however, federal recognition is usually discussed in relation to tribes, not their governing bodies. Brief for Respondent Ute Indian Tribe of the Uintah and Ouray Reservation 13 (“The recognized relationship is a political relationship between the United States and the tribe”); see also, e.g., note following 25 U.S.C. § 5130, p. 678 (“ ‘[T]he United States has a trust responsibility to recognized Indian tribes, maintains a government-to-government relationship with those tribes, and recognizes the sovereignty of those tribes’ ”). In addition, the CARES Act’s use of the term “recognized governing body” is borrowed from ISDA itself, which lists the “recognized governing body” of an Indian tribe as one type of “tribal organization” empowered to contract with the government on the tribe’s behalf. § 5304(l). In the ISDA context, this term has long been understood to apply to an ANC’s board of directors, the ANC’s governing body as a matter of corporate law. See, e.g., App. 45 (An ANC’s “board of directors … is its ‘governing body’ ”); see also Black’s Law Dictionary, at 219 (defining “Board of Directors” as “[t]he governing body of a private corporation”). Indeed, respondents do not dispute that the plain meaning of “recognized governing body” covers an ANC’s board of directors.[12]

Looking to the plain meaning of “recognized governing body” makes even more sense because nothing in either the CARES Act or ISDA suggests that the term “recognized governing body” places additional limits on the kinds of Indian tribes eligible to benefit under the statutes. In both laws, the term instead pinpoints the particular entity that will receive funding on behalf of an Indian tribe. See 42 U.S.C. § 801(g)(5); 25 U.S.C. § 5304(l). Because ANCs are Indian tribes within the meaning of the CARES Act, an ANC’s board of directors is a “recognized governing body” eligible to receive funding under Title V of the Act.

IV

The Court today affirms what the Federal Government has maintained for almost half a century: ANCs are Indian tribes under ISDA. For that reason, they are Indian tribes under the CARES Act and eligible for Title V funding. The judgment of the Court of Appeals for the District of Columbia Circuit is reversed, and the cases are remanded for further proceedings consistent with this opinion.

It is so ordered.


Justice GORSUCH, with whom Justice THOMAS and Justice KAGAN join, dissenting:

The Coronavirus Aid, Relief, and Economic Security Act (CARES Act) directed trillions of dollars to various recipients across the Nation to help them address the COVID–19 pandemic. Our case focuses on $8 billion Congress set aside for “Tribal governments.” The question we must answer is whether Alaska’s for-profit Alaska Native Corporations (ANCs) qualify as “Tribal governments.” If they do, they may receive approximately $450 million of the earmarked funds; if not, the money will go to tribes across the country. The Court of Appeals for the District of Columbia Circuit wrote a thoughtful and unanimous opinion holding that ANCs are not “Tribal governments.” Today, the Court disagrees, providing two competing theories for its result. Respectfully, I find neither persuasive and would affirm.

I

The Alaska Native Claims Settlement Act of 1971 (ANCSA) sought to “settle all land claims by Alaska Natives” by “transfer[ring] $962.5 million in state and federal funds and approximately 44 million acres of Alaska land to state-chartered private business corporations” in which Alaska Natives were given shares. Alaska v. Native Village of Venetie Tribal Government, 522 U.S. 520, 523–524, 118 S.Ct. 948, 140 L.Ed.2d 30 (1998); 43 U.S.C. § 1601 et seq. In particular, ANCSA established over 200 “Village Corporations” and 12 “Regional Corporations.” §§ 1602, 1606.

The Village Corporations were created to hold and manage “lands, property, funds, and other rights and assets for and on behalf of a Native village.” § 1602(j). Meanwhile, shares in the Regional Corporations went to individuals across many different tribes and villages. §§ 1604, 1606(g)(1)(A). These corporations received most of the settlement funds and lands Congress provided, assets they use to “conduct business for profit.” §§ 1606(d), 16101613; see also Brief for Federal Petitioner 5. Today, ANCs are involved in oil and gas, mining, military contracting, real estate, construction, communications and media, engineering, plastics, timber, and aerospace manufacturing, among other things. GAO, Report to Congressional Requesters, Regional Alaska Native Corporations: Status 40 Years After Establishment, and Future Considerations (GAO–13–121, Dec. 2012). “In fiscal year 2017, ANCs had a combined net revenue of $9.1 billion.” Confederated Tribes of Chehalis Reservation v. Mnuchin, 456 F.Supp.3d 152, 157 (DDC 2020).

Everyone agrees that ANCs are entitled to some CARES Act relief. Already, they have received benefits Congress allocated to corporations, like the Paycheck Protection Program. See Brief for Respondent Ute Indian Tribe of Uintah and Ouray Reservation 1 (Brief for Respondent Ute Tribe). Congress also accounted for ANC shareholders, and all Alaskans, when it directed over $2 billion to the State. In fact, Alaska received more money per capita than all but two other States. Id., at 3; Congressional Research Service, General State and Local Fiscal Assistance and COVID–19: Background and Available Data (Feb. 8, 2021). The Alaska Native Villages received hundreds of millions of those dollars because everyone agrees they qualify as tribal governments for purposes of the CARES Act. See ibid. This suit concerns only the ANCs’ claim of entitlement to additional funds statutorily reserved for “Tribal governments.” 42 U.S.C. § 801(a)(2)(B). If that counterintuitive proposition holds true, ANCs will receive approximately $450 million that would otherwise find its way to recognized tribal governments across the country, including Alaska’s several hundred Native Villages. See Letter from E. Prelogar, Acting Solicitor General, to S. Harris, Clerk of Court (May 12, 2021).

In the CARES Act, Congress defined a “Tribal government” as the “recognized governing body of an Indian Tribe.” § 801(g)(5). In turn, Congress specified in § 801(g)(1) that the term “Indian Tribe” should carry here the same meaning that it bears in the Indian Self-Determination and Education Assistance Act of 1975 (ISDA). The relevant portion of that statute provides as follows:

“ ‘Indian tribe’ [or ‘Indian Tribe’] means any Indian tribe, band, nation, or other organized group or community, including any Alaska Native village or regional or village corporation as defined in or established pursuant to the Alaska Native Claims Settlement Act (85 Stat. 688) [43 U.S.C. 1601 et. seq.], which is recognized as eligible for the special programs and services provided by the United States to Indians because of their status as Indians.” 25 U.S.C. § 5304(e).

The question before us thus becomes whether ANCs count as “Indian tribes” under the longstanding terms Congress adopted in ISDA almost 50 years ago. To resolve that dispositive question, we must answer two subsidiary ones: (1) Does the statute’s final clause (call it the recognition clause) apply to the ANCs listed earlier? (2) If so, are ANCs “recognized as eligible for the special programs and services provided by the United States to Indians because of their status as Indians”? In my view, the recognition clause does apply to ANCs along with the other listed entities. And ANCs are not “recognized” as tribes eligible for the special programs and services provided by the United States to Indians because of their status as Indians.

II

A

Start with the question whether the recognition clause applies to the ANCs. As the nearest referent and part of an integrated list of other modified terms, ANCs must be subject to its terms. Unsurprisingly, the Court of Appeals reached this conclusion unanimously. Lawyers often debate whether a clause at the end of a series modifies the entire list or only the last antecedent. E.g.,Lockhart v. United States, 577 U.S. 347, 350–352, 136 S.Ct. 958, 194 L.Ed.2d 48 (2016); id., at 362–369, 136 S.Ct. 958 (KAGAN, J., dissenting); Facebook, Inc. v. Duguid, 592 U.S. ––––, –––– – ––––, 141 S.Ct. 1163, 1169–1170, 209 L.Ed.2d 272 (2021); id., at –––– – ––––, 141 S.Ct. at 1167–1169 (ALITO, J., concurring in judgment). In ISDA, for example, some might wonder whether the recognition clause applies only to ANCs or whether it also applies to the previously listed entities—“Indian tribe[s], band[s], nation[s],” etc. But it would be passing strange to suggest that the recognition clause applies to everything except the term immediately preceding it. A clause that leaps over its nearest referent to modify every other term would defy grammatical gravity and common sense alike. See, e.g.,Facebook, Inc., 592 U.S., at ––––, 141 S.Ct. at 1170; Jama v. Immigration and Customs Enforcement, 543 U.S. 335, 344, n. 4, 125 S.Ct. 694, 160 L.Ed.2d 708 (2005).

Exempting ANCs from the recognition clause would be curious for at least two further reasons. First, the reference to ANCs comes after the word “including.” No one disputes that the recognition clause modifies “any Indian tribe, band, nation, or other organized group or community.” So if the ANCs are included within these previously listed nouns—as the statute says they are—it’s hard to see how they might nonetheless evade the recognition clause. Second, in the proceedings below it was undisputed that the recognition clause modifies the term “Alaska Native village[s],” even as the ANCs argued that the clause does not modify the term “Alaska Native … regional or village corporation.” Confederated Tribes of Chehalis Reservation v. Mnuchin, 976 F.3d 15, 23 (CADC 2020); Brief for Federal Petitioner 46. But to believe that, one would have to suppose the recognition clause skips over only half its nearest antecedent. How the clause might do that mystifies. See Facebook, 592 U.S., at ––––, 141 S.Ct. at 1169 (“It would be odd to apply the modifier … to only a portion of this cohesive preceding clause”).

At least initially, the Court accepts the obvious and concedes that the recognition clause modifies everything in the list that precedes it. Ante, at 2441 – 2442. But this leaves the Court in a bind. If the recognition clause applies to ANCs, then ANCs must be “recognized” in order to receive funds. And “recognition” is a formal concept in Indian law: “Federal acknowledgement or recognition of an Indian group’s legal status as a tribe is a formal political act confirming the tribe’s existence as a distinct political society, and institutionalizing the government-to-government relationship between the tribe and the federal government.” 1 F. Cohen, Handbook of Federal Indian Law § 3.02[3], pp. 133–134 (N. Newton ed. 2012); see also id., § 3.02[2], at 132–133. No one contends that ANCs are recognized by the federal government in this sense.

Admittedly, not every statutory use of the word “recognized” must carry the same meaning. See ante, at 2445. But not only does ISDA arise in the field of Indian law where the term “recognition” has long carried a particular meaning. The statute proceeds to refer to groups that are “recognized as eligible for the special programs and services provided by the United States to Indians because of their status as Indians.” This full phrase is a mouthful, but it was a familiar one to Congress by the time it passed ISDA in 1975. In preceding decades, Congress used similar language in statute after statute granting and terminating formal federal recognition of certain tribes.1 All of which strongly suggests that ISDA’s recognition clause likewise refers to the sort of formal government-to-government recognition that triggers eligibility for the full “panoply of benefits and services” the federal government provides to Indians.[1] Cohen, Handbook of Federal Indian Law § 3.02[3], at 134.

There is more evidence too. When Congress passed ISDA, it sought to provide Indians “meaningful leadership roles” that are “crucial to the realization of selfgovernment.” 25 U.S.C. § 5301. Accordingly, “tribes may enter into ‘self-determination contracts’ with federal agencies to take control of a variety of federally funded programs.” Menominee Tribe of Wis. v. United States, 577 U.S. 250, 252, 136 S.Ct. 750, 193 L.Ed.2d 652 (2016); see also § 5321. Handing over federal government programs to tribal governments in order to facilitate self-government is precisely the sort of government-to-government activity that aligns with formal recognition. See also §§ 5384, 5385 (reflecting later amendments to ISDA) (instructing the Secretary to enter compacts and funding agreements “with each Indian tribe participating in self-governance in a manner consistent with the Federal Government’s trust responsibility, treaty obligations, and the government-to-government relationship between Indian tribes and the United States”).

The CARES Act itself offers still further clues. In the provision at issue before us, Congress appropriated money “for making payments to States, Tribal governments, and units of local government.”42 U.S.C. § 801(a)(1). Including tribal governments side-by-side with States and local governments reinforces the conclusion that Congress was speaking of government entities capable of having a government-to-government relationship with the United States. Recall, as well, that the CARES Act defines tribal governments as the “recognized governing body of an Indian Tribe.” § 801(g)(5). ANCs, like most corporations, have a board of directors, 43 U.S.C. § 1606(f), and a corporate board may well be the governing body of an enterprise. But they do not govern any people or direct any government.

B

While initially acknowledging that the recognition clause applies to ANCs, the Court interprets its terms differently. Rather than understanding it as denoting a government-to-government relationship, the Court says, we should look to its “plain meaning.” Ante, at 2441. But even if we could somehow set aside everything we know about how the term is used in Indian law and the CARES Act itself, it’s far from clear what “plain meaning” the Court alludes to or how ANCs might fall within it.

First, consider the Federally Recognized Indian Tribe List Act of 1994 (List Act). The List Act instructs the Secretary of the Interior to keep a list of all federally recognized Indian tribes. It does so using language materially identical to that found in ISDA’s recognition clause: “The Secretary shall publish in the Federal Register a list of all Indian tribes which the Secretary recognizes to be eligible for the special programs and services provided by the United States to Indians because of their status as Indians.” 25 U.S.C. § 5131(a). No one before us thinks the Secretary of the Interior should list the ANCs as federally recognized tribes. And given that, it is unclear how ANCs might count as federally recognized tribes under ISDA. To be sure, the List Act came after ISDA. But the Court never attempts to explain how the plain meaning of nearly identical language in remarkably similar legal contexts might nevertheless differ.

Second, on any account, ISDA requires an Indian tribe or group to be “recognized.” But what work does this term do on the Court’s interpretation? Without explanation, the Court asserts that ANCs are “ ‘recognized as eligible’ for ANCSA’s benefits” because they are “ ‘established pursuant to’ ANCSA.” Ante, at 2441 – 2442. But on this understanding, any group eligible for benefits would seem, on that basis alone, to be “recognized” as eligible for those benefits. The Court’s reading comes perilously close to rendering the term “recognized” surplusage: If ISDA really does capture any group merely “eligible” for federal benefits, why not just say that and avoid introducing a term with a particular and well-established meaning in federal Indian law?

Third, even putting aside the recognition requirement, ISDA says tribes must receive services from the United States “because of their status as Indians.” § 5304(e). The Court says that ANSCA made ANCs eligible for settlement funds and lands because its shareholders are Alaska Natives. Ante, at 2441 – 2442. But is compensation provided to profit-maximizing corporations whose shareholders happen to be Alaska Natives (at least initially, see 43 U.S.C. §§ 1606(h)(1), 1629c) a benefit provided to Indians? And were ANSCA settlement funds provided to ANCs and their shareholders because of their Indian status or simply because Congress wanted to resolve a land dispute regardless of the claimants’ status? See § 1601(b) (“[T]he settlement should be accomplished … without establishing any permanent racially defined institutions, rights, privileges, or obligations … ”); but see § 1626(e)(1) (“For all purposes of Federal law, a Native Corporation shall be considered to be a corporation owned and controlled by Natives … ”). Again, the answers remain unclear. Ante, at 2442.

Finally, ISDA provides that tribes must be recognized as eligible for “the special programs and services provided by the United States.” 25 U.S.C. § 5304(e) (emphasis added). It is a small word to be sure, but “the” suggests the statute refers to a particular slate of programs and services—here the full panoply of federal Indian benefits—not just any special programs and services the government might supply. See Nielsen v. Preap, 586 U.S. ––––, ––––, 139 S.Ct. 954, 965, 203 L.Ed.2d 333 (2019) (“[G]rammar and usage establish that ‘the’ is ‘a function word … indicat[ing] that a following noun or noun equivalent is definite or has been previously specified by context’ ” (quoting Merriam-Webster’s Collegiate Dictionary 1294 (11th ed. 2005))). It’s undisputed too that, while ANSCA provided certain compensation to ANCs, Congress has never made those entities “eligible for the full range of federal services and benefits available to [recognized] Indian tribes.” Brief for Federal Petitioner 48.

Rather than confront this last problem, the Court elides it. In its opinion “the special programs and services” becomes “federal Indian programs and services,” ante, at 2442, 2445. Nor, even if one were to (re)interpret “the special programs” as “some special programs,” is it clear whether ANCSA qualifies. See ante, at 2442. On what account is settling a dispute over land title a “program” or “service”? See 43 U.S.C. § 1626(a) (“The payments and grants authorized under this chapter constitute compensation for the extinguishment of claims to land, and shall not be deemed to substitute for any governmental programs otherwise available to the Native people of Alaska”). Beyond even that, ANCSA extended specific compensation to ANCs—money and title—in exchange for settling land claims. ANCSA provided ANCs nothing in the way of health, education, economic, and social services of the sort that ISDA allows tribes to contract with the federal government to provide.

The Court’s reply creates another anomaly too. If receiving any federal money really is enough to satisfy the recognition clause, many other Indian groups might now suddenly qualify as tribes under the CARES Act, ISDA, and other federal statutes. A 2012 GAO study, for example, identified approximately 400 nonfederally recognized tribes in the lower 48 States, of which 26 had recently received direct funding from federal programs. GAO, Indian Issues: Federal Funding for Non-Federally Recognized Tribes (GAO–12–348, Apr. 2012). This number does not include additional entities that may have received federal benefits in the form of loans, procurement contracts, tax expenditures, or amounts received by individual members. Id., at 35. And still other groups may have federal rights secured by treaty, which may exist even if the tribe is no longer recognized. Cf. Menominee Tribe v. United States, 391 U.S. 404, 412–413, 88 S.Ct. 1705, 20 L.Ed.2d 697 (1968). How does the Court solve this problem? With an ipse dixit. See ante, at 2443 (“[T]he Court does not open the door to other Indian groups that have not been federally recognized becoming Indian tribes under ISDA”). The Court’s “plain meaning” argument thus becomes transparent for what it is—a bare assertion that the recognition clause carries a different meaning when applied to ANCs than when applied to anyone else.

III

With its first theory facing so many problems, the Court offers a backup. Now the Court suggests that ANCs qualify as tribes even if they fail to satisfy the recognition clause. Ante, at 2447. Because ISDA’s opening list of entities specifically includes ANCs, the Court reasons, the recognition clause must be read as inapplicable to them alone. Essentially, the Court quietly takes us full circle to the beginning of the case—endorsing an admittedly ungrammatical reading of the statute in order to avoid what it calls the “implausible” result that ANCs might be included in ISDA’s first clause only to be excluded by its second. Ante, at 2448.

But it is difficult to see anything “implausible” about that result. When Congress adopted ANSCA in 1971, it “created over 200 new legal entities that overlapped with existing tribes and tribal nonprofit service organizations.” Brief for Professors and Historians as Amici Curiae 27. At that time, there was no List Act or statutory criteria for formal recognition. Instead, as the Court of Appeals ably documented, confusion reigned about whether and which Alaskan entities ultimately might be recognized as tribes. 976 F.3d at 18; see also Brief for Professors and Historians as Amici Curiae 28; Cohen, Handbook of Federal Indian Law 270–271 (1941). When Congress adopted ISDA just four years later, it sought to account for this uncertainty. The statute listed three kinds of Alaskan entities: Alaska Native Villages, Village Corporations, and Regional Corporations. And the law did “meaningful work by extending ISDA’s definition of Indian tribes” to whichever among them “ultimately were recognized.” 976 F.3d at 26. It is perfectly plausible to think Congress chose to account for uncertainty in this way; Congress often adopts statutes whose application depends on future contingencies. E.g.,Gundy v.United States, 588 U.S. ––––, –––– – ––––, 139 S.Ct. 2116, 2126–2127, 204 L.Ed.2d 522 (2019) (GORSUCH, J., dissenting)(citing examples).

Further aspects of Alaskan history confirm this understanding. Over time, the vast majority of Alaska Native Villages went on to seek—and win—formal federal recognition as Indian tribes. See 86 Fed. Reg. 7557–7558 (2021); Brief for Respondent Confederated Tribes of Chehalis Reservation et al. 23. (It’s this recognition which makes them indisputably eligible for CARES Act relief. See supra, at 2453.) By the time it enacted ISDA, too, Congress had already authorized certain Alaska Native groups to organize based on “a common bond of occupation, or association, or residence.” 25 U.S.C. § 5119. This standard, which did not require previous recognition as “bands or tribes,” was unique to Alaska. See ibid. And at least one such entity—the Hydaburg Cooperative Association, organized around the fish industry—also went on to receive federal tribal recognition in the 1990s. 86 Fed. Reg. 7558; see also Brief for Respondent Confederated Tribes of Chehalis Reservation et al. 35–36. Though short lived and not a full government-to-government political recognition, the Secretary of the Interior at one point even listed ANCs as “ ‘Indian Entities Recognized and Eligible To Receive Services From the United States Bureau of Indian Affairs,’ ” before eventually removing them. Ante, at 2446. And in 1996, Congress considered a bill that would have “deemed” a particular ANC—the Cook Inlet Region, Inc.—“an Indian tribal entity for the purpose of federal programs for which Indians are eligible because of their status as Indians” and required that it be included on “any list that designates federally recognized Indian tribes.” H.R. 3662, 104th Cong., 2d Sess., § 121. Of course, the ANCs before us currently are not recognized as tribes. But all this history illustrates why it is hardly implausible to suppose that a rational Congress in 1975 might have wished to account for the possibility that some of the Alaskan entities listed in ISDA might go on to win recognition.

The particular statutory structure Congress employed in ISDA was perfectly ordinary too. Often Congress begins by listing a broad universe of potentially affected parties followed by limiting principles. Take this example from the CARES Act. Congress afforded benefits to certain “ ‘unit[s] of local government,’ ” and defined that term to mean “a county, municipality, town, township, village, parish, borough, or other unit of general government below the State level with a population that exceeds 500,000.” 42 U.S.C. § 801(g)(2). The litigants tell us no parish in the country today has a population exceeding half a million. See Brief for Respondent Ute Tribe 31. Suppose they’re right. Is that any basis for throwing out the population limitation and suddenly including all parishes? Of course not. Once more, an opening list provides the full field of entities that may be eligible for relief and the concluding clause does the more precise work of winnowing it down. The clauses work in harmony, not at cross-purposes.[2]

In defense of its implausibility argument, the Court submits any other reading would yield a redundancy. Unless ANCs are exempt from the recognition clause, the Court suggests, Congress had no reason to mention them in the statute’s opening clause because they already “fit into one of the pre-existing ISDA categories,” like “ ‘tribe[s], band[s], nation[s], or other organized group[s] or communit[ies],’ ” ante, at 2448 – 2449 (quoting 25 U.S. C § 5304(e)).

But this much is hard to see too. Admittedly, illustrative examples of more general terms are in some sense always redundant. See Chickasaw Nation v. United States, 534 U.S. 84, 89, 122 S.Ct. 528, 151 L.Ed.2d 474 (2001) (“[That] is meant simply to be illustrative, hence redundant”). But Congress often uses illustrative examples in its statutory work, and the practice is not entirely pointless. As this Court has explained, illustrative examples can help orient affected parties and courts to Congress’s thinking, and often they serve to “remove any doubt” about whether a particular listed entity is captured within broader definitional terms. Ali v. Federal Bureau of Prisons, 552 U.S. 214, 226, 128 S.Ct. 831, 169 L.Ed.2d 680 (2008); see also Federal Land Bank of St. Paul v. Bismarck Lumber Co., 314 U.S. 95, 99–100, 62 S.Ct. 1, 86 L.Ed. 65 (1941); A. Scalia & B. Garner, Reading Law 176–177 (2012). That much is certainly true here. If Congress had failed to list ANCs in ISDA’s first clause, a dispute could have arisen over whether these corporate entities even qualify as “Indian … organized group[s] or communit[ies].” See Brief for Petitioners in No. 20544, p. 5; supra, at 2457 (citing 43 U.S.C. § 1601(b)).

Having said all this, my disagreement with the Court’s “implausibility” argument is a relatively modest one. We agree that linguistic and historical context may provide useful interpretive guidance, and no one today seeks to suggest that judges may sanitize statutes in service of their own sensibilities about the rational and harmonious.[3] Instead, our disagreement is simply about applying the plain meaning, grammar, context, and canons of construction to the particular statutory terms before us. As I see it, an ordinary reader would understand that the recognition clause applies the same way to all Indian groups. And if that’s true, there’s just no way to read the text to include ANCs as “Tribal governments” for purposes of the CARES Act.

*

In my view, neither of the Court’s alternative theories for reversal can do the work required of it. The recognition clause denotes the formal recognition between the federal government and a tribal government that triggers eligibility for the full panoply of special benefits given to Indian tribes. Meanwhile, a fair reading of that clause indicates that it applies to ANCs. Accordingly, with respect, I would affirm.

141 S.Ct. 2434, 210 L.Ed.2d 517, 21 Cal. Daily Op. Serv. 6218, 2021 Daily Journal D.A.R. 6398, 28 Fla. L. Weekly Fed. S 994

[]

Jimerson vs. Tetlin Native Corporation

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 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.