Topic: Corporate

MEMORANDUM [*]

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

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

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

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

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

AFFIRMED.

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

BACKGROUND

Statutory Framework

I. ANCSA

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

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

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

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

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

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

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

II. ANILCA

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

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

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

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

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

Procedural History

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

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

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

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

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

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

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

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

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

STANDARD OF REVIEW

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

ANALYSIS

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

I. Congressional intent

A. Statutory language and framework

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

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

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

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

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

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

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

B. Purpose

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

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

II. Effect on the Secretary’s eligibility determination

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

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

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

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

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

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

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

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

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

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

CONCLUSION

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

DISMISSED.

Plaintiff Evelyn Naigan’s Second Amended Complaint (“SAC”) alleges three claims against Defendant NANA Services, LLC for violation of Title VII of the Civil Rights Act of 1964, 42 USC 2000e et seq. (“Title VII”). ECF 19. Defendant has filed a Motion to Dismiss for failure to state a claim under Federal Rules of Civil Procedure 12(b)(6). ECF 25.

Because Plaintiff alleges she did not receive her Right to Sue letter until April 15, 2013, her claims are not time-barred. Further, Defendant is an “employer” for purposes of Title VII and therefore subject to suit under it. Consequently, Defendant’s motion to dismiss is DENIED.

I. LEGAL STANDARD

A motion to dismiss pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure tests the legal sufficiency of the claims asserted in the complaint. Fed. R. Civ. P. 12(b)(6); Navarro v. Block, 250 F.3d 729, 731 (9th Cir. 2001). The court must accept all factual allegations pleaded in the complaint as true and must construe them and draw all reasonable inferences from them in favor of the nonmoving party. Cahill v. Liberty Mutual Ins. Co., 80 F.3d 336, 337-38 (9th Cir. 1996). To avoid a Rule 12(b)(6) dismissal, a complaint need not contain detailed factual allegations, rather, it must plead “enough facts to state a claim to relief that is plausible on its face.” Bell Atl. Corp. v. Twombly, 550 U.S. 544, 570, 127 S. Ct. 1955, 167 L. Ed. 2d 929 (2007). A claim has “facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged.” Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S. Ct. 1937, 173 L. Ed. 2d 868 (2009) (citing Twombly, 550 U.S. at 556). “Where a complaint pleads facts that are ‘merely consistent with’ a defendant’s liability, it stops short of the line between possibility and plausibility of ‘entitlement to relief.'” Iqbal, 556 U.S. at 678 (quoting Twombly, 550 U.S. at 557).

“[A] plaintiff’s obligation to provide the ‘grounds’ of his ‘entitle[ment] to relief’ requires more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do.” Twombly, 550 U.S. at 555 (quoting Papasan v. Allain, 478 U.S. 265, 286, 106 S. Ct. 2932, 92 L. Ed. 2d 209 (1986)) (alteration in original). A court need not accept “legal conclusions” as true. Iqbal, 556 U.S. at 678. Despite the deference the court must pay to the plaintiff’s allegations, it is not proper for the court to assume that “the [plaintiff] can prove facts that [he or she] has not alleged or that defendants have violated the . . . laws in ways that have not been alleged.” Associated Gen. Contractors of Cal., Inc. v. Cal. State Council of Carpenters, 459 U.S. 519, 526, 103 S. Ct. 897, 74 L. Ed. 2d 723 (1983).

Generally, courts may not consider material outside the complaint when ruling on a motion to dismiss. Hal Roach Studios, Inc. v. Richard Feiner & Co., 896 F.2d 1542, 1555 n.19 (9th Cir. 1990). However, documents specifically identified in the complaint whose authenticity is not questioned by parties may also be considered. Fecht v. Price Co., 70 F.3d 1078, 1080 n.1 (9th Cir. 1995) (superseded by statutes on other grounds). Moreover, the court may consider the full text of those documents, even when the complaint quotes only selected portions. Id. It may also consider material properly subject to judicial notice without converting the motion into one for summary judgment. Barron v. Reich, 13 F.3d 1370, 1377 (9th Cir. 1994).

As a general rule, a court freely grants leave to amend a complaint which has been dismissed. Fed. R. Civ. P. 15(a). However, leave to amend may be denied when “the court determines that the allegation of other facts consistent with the challenged pleading could not possibly cure the deficiency.” Schreiber Distrib. Co. v. Serv-Well Furniture Co., 806 F.2d 1393, 1401 (9th Cir. 1986).

II. DISCUSSION

a. Right to Sue Letter

Defendant, in its Motion to Dismiss, makes a statute of limitations challenge to Plaintiff’s Second Amended Complaint. Specifically, Defendant argues Plaintiff failed to file her Complaint within the ninety day statutory limitation imposed by Title VII. 42 USC 2000e-5(f)(1).

While Plaintiff did not file her initial Complaint in this matter until November 1, 2012, nearly six months after her claim was denied on April 4, 2012, she avers that she “never received the Dismissal and Notice of Rights from the EEOC”, that she “checks her mail every day”, and that only after “multiple inquiries” by her counsel did she obtain a copy of the Right to Sue letter. SAC ¶¶ 8-9. While the “mailbox rule” creates a rebuttable presumption that any letter mailed is received after three days, “[e]vidence of non-receipt can be used to establish that the notice was never mailed.” Custer v. Murphy Oil USA, Inc., 503 F.3d 415, 420 (5th Cir. 2007) (quoted by Duron v. Albertson’s LLC, 560 F.3d 288, 291 (5th Cir. 2009)).

Here, Plaintiff and her counsel’s repeated inquiries and evidence she checked her mail daily rebut the presumption that the Right to Sue letter was received. Therefore the Court tolls the effective date the letter was received until April 15, 2013. SAC ¶ 9.

b. Title VII

Defendant also argues it is not an “employer” covered under Title VII, which prohibits employer discrimination. If Defendant’s reading were correct, Defendant would be immune to this suit. Defendant is not immune.

Title VII excepts Alaska Native Corporations and their subsidiaries from its prohibition on discrimination, but NANA is neither an Alaska Native Corporation nor an excepted subsidiary. 43 U.S.C. 1626(g). Instead, NANA Services, LLC is a subsidiary of Akima, LLC, an Alaskan limited liability company. Decl. Jeffrey Hills ¶ 3, ECF 8. Akima, LLC is also not a subsidiary of an Alaska Native Corporation; it is a subsidiary of NANA Development Corporation, which is an Alaskan corporation. Id. at ¶ 4. NANA Development Corporation is, in fact, a subsidiary of the Alaska Native Corporation NANA Regional Corporation. Id. at ¶ 6.

As the Supreme Court has stated, a “corporate parent which owns the shares of a subsidiary does not, for that reason alone, own or have legal title to the assets of the subsidiary; and, it follows with even greater force, the parent does not own or have legal title to the subsidiaries of the subsidiary.” Dole Food Co. v. Patrickson, 538 U.S. 468, 475, 123 S. Ct. 1655, 155 L. Ed. 2d 643 (2003). And, in 43 U.S.C. § 1626(g)‘s plain terms, Title VII only excepts “Native Corporations” and “corporations, partnerships, joint ventures, trusts, or affiliates in which the Native Corporation owns not less than 25 per centum of the equity” from its definition of “employer.”

Neither exception includes Defendant. NANA Services, LLC is a subsidiary of a subsidiary of a subsidiary, and extending Title VII’s exemptions to such a tenuous relationship “contravene[es] the purposes of both the [Alaska Native Claims Settlement Act] and Title VII.” Fox v. Portico Reality Servs. Office, 739 F. Supp. 2d 912, 917 (E.D. Va. 2010). Therefore the Court finds Defendant an “employer” under Title VII.

III. CONCLUSION

Because Plaintiff’s claims are not time-barred and because Defendant is an “employer” under Title VII, Defendant’s motion to dismiss is DENIED. Defendant is held to answer within 21 days of this Order.

IT IS SO ORDERED.

Dated: January 21, 2015

/s/ Cynthia Bashant

Hon. Cynthia Bashant

United States District Judge

I. INTRODUCTION

The Alaska Division of Banking and Securities civilly fined Sitnasuak Native Corporation shareholder Austin Ahmasuk for submitting a newspaper opinion letter about Sitnasuak’s shareholder proxy voting procedures without filing that letter with the Division as a shareholder proxy solicitation. Ahmasuk filed an agency appeal, arguing that the Division wrongly interpreted its proxy solicitation regulation to cover his letter and violated his constitutional due process and free speech rights. An administrative law judge upheld the Division’s sanction in an order that became the final agency decision, and the superior court upheld that decision in a subsequent appeal. Ahmasuk raises his same arguments on appeal to us. We conclude that Ahmasuk’s opinion letter is not a proxy solicitation under the Division’s controlling regulations, and we therefore reverse the superior court’s decision upholding the Division’s civil sanction against Ahmasuk without reaching the constitutional arguments.

II. BACKGROUND

A. State Laws And Regulations Relevant To Alaska Native Corporations

Corporations authorized by the Alaska Native Claims Settlement Act (ANCSA)[1] are incorporated under the Alaska Corporations Code.[2] ANCSA explicitly exempts ANCSA corporations from federal securities regulation compliance,[3] and the Division therefore regulates certain activities of specified ANCSA corporations and their shareholders and investigates complaints of illegal conduct.[4]

The dispute in this appeal — involving ANCSA corporation shareholder voting and proxy solicitation — requires an initial consideration of relevant Alaska corporations code statutes,[5] Alaska securities regulation statutes,[6] and regulations promulgated by the Division in its role as regulator of ANCSA corporations’ shareholder election activities.[7] We begin with shareholder voting, move next to shareholder voting by proxy, and then conclude with solicitation of shareholder proxies.

1. Shareholder voting

Generally, subject to variation in a corporation’s articles of incorporation, a shareholder has the right to one vote per share owned and to “vote on each matter submitted to a vote at a meeting of shareholders.”[8] And with respect to electing members to a board of directors, again unless the articles of incorporation provide otherwise, a shareholder may “cumulate votes,”[9] i.e., may vote “the number of shares owned by the shareholder for as many persons as there are directors to be elected,” giving one candidate all votes or distributing votes among candidates as the shareholder deems appropriate.[10] For example, a shareholder with 100 shares of stock voting in an election of 4 members to the board of directors would have 400 votes to cast, either all for 1 candidate or divided among the candidates in any way the shareholder chooses.

2. Shareholder proxy voting

Generally, a “person entitled to vote shares may authorize another person or persons to act by proxy with respect to the shares.”[11] The term “proxy” is statutorily defined in simple fashion as “a written authorization . . . signed by a shareholder . . . giving another person power to vote with respect to the shares of the shareholder.”[12]

By statute the Division regulates certain ANCSA corporation and shareholder election activities.[13] The Division has promulgated two relevant regulations about proxies. First, the Division has construed “proxy” more expansively than the corporations code by defining it as “a written authorization which may take the form of a consent, revocation of authority, or failure to act or dissent, signed by a shareholder . . . and giving another person power to vote with respect to the shares of the shareholder.”[14] Second, the Division has established specific substantive proxy rules.[15] For example, the relevant regulation provides that one who holds a proxy “shall vote in accordance with any choices made by the shareholder or in the manner provided by the proxy when the shareholder has not specified a choice.”[16] With respect to electing directors, that regulation also describes how a proxy document must present the shareholder with voting choices[17] and provides that “if the shareholders have cumulative voting rights, a proxy may confer discretionary authority to cumulate votes.”[18]

Discretionary cumulative proxy voting is the underlying issue of this litigation. As described above, if a corporation allows cumulative voting in director elections, a shareholder will have the same multiple of votes per share as there are director candidates; the shareholder may, in the shareholder’s sole discretion, allocate those votes among the director candidates in any manner.[19] How does this work with respect to proxy voting in ANCSA corporations’ director elections? A proxy holder ultimately must vote the shareholder’s shares as directed by the shareholder.[20] But a proxy form may provide for a shareholder to grant the proxy holder the same discretionary cumulative voting authority held by the shareholder.[21] The proxy form must set out options and instructions for the shareholder to direct the proxy holder how the shares should be voted for individual director candidates.[22] And the proxy form must set out the proxy holder’s authority to vote the shareholder’s shares in the event the shareholder fails to designate how the shares are to be voted.[23]

3. Proxy solicitation regulation

Particularly relevant to this appeal, the Division regulates share holder proxy solicitations for some ANCSA corporations: proxy solicitation materials, including proxies and proxy statements,[24] must be filed with the Division and may not contain false material facts (or omit facts necessary to keep a statement from being misleading).[25] The Division defines “solicitation” as “a request to execute or not to execute, or to revoke a proxy” and alternatively as the “distributing of a proxy or other communication to shareholders under circumstances reasonably calculated to result in the procurement, withholding, or revocation of a proxy.”[26]

B. Sitnasuak Proxy Voting

Sitnasuak, headquartered in Nome, is the largest ANCSA village corporation in the Bering Straits region and is subject to Division regulation. Sitnasuak has almost 2,900 shareholders and an 11-member board of directors. Sitnasuak allows cumulative voting — shareholders thus may cast their cumulated votes for one director candidate or distribute votes among some or all director candidates[27] — and its shareholders may vote for directors either in person or by proxy.[28] Accordingly, Sitnasuak may, and does, allow discretionary proxy voting.[29]

Discretionary proxy voting in director elections has been the subject of Sitnasuak shareholder debate for at least the last few years. Sitnasuak’s bylaws provide for a special shareholders’ meeting when holders of 10% of its voting stock request it, and in 2015 a sufficient number of Sitnasuak shareholders petitioned for a special shareholders’ meeting to discuss eliminating discretionary proxy voting. Notice of the special shareholders’ meeting was given in December 2015, and the meeting convened in early January 2016. A proposal to amend Sitnasuak’s articles of incorporation to eliminate discretionary proxy voting in director elections was explained to the attendees. But a required voting quorum could not be established; the remainder of the meeting was considered informational only, and the parliamentarian made a presentation about cumulative and proxy voting.

Soon thereafter Sitnasuak issued a newsletter discussing the special shareholders’ meeting and setting out a written version of the parliamentarian’s discussion of cumulative and proxy voting. Sitnasuak’s newsletter advocated for discretionary proxy voting, with the following statements:

Many shareholders believe that the Board of Directors use discretionary and cumulative voting to keep their power by reelecting themselves or others. While a discretionary proxy can have that result, it is also used by shareholders who believe they are in a minority to elect someone to voice their interests on the board. . . . However, electing a minority member to a board can be difficult. Most shareholders can only attend a meeting by proxy. This means that they won’t know which candidates running for a board will have enough votes to be elected. This happens when shareholders . . . vote directed proxies and others vote discretionary proxies. Directed votes can’t be changed. A candidate who does not get enough directed votes to win still uses up the directed vote. It can’t be transferred to another candidate.

….

…Shareholders who are able to attend a meeting in person have the opportunity to change their votes and help a candidate who doesn’t have enough proxy votes to potentially be elected to a board seat. That’s also what a proxy holder can do with a discretionary proxy. If four candidates run together on one proxy, and only one has enough directed votes to give them a chance of winning a board seat, then a discretionary proxy can mean the difference between electing a minority candidate to the board, or not. Eliminating discretionary voting removes the possibility for this to happen. Of course this means that the majority can also use discretion to assure election of a maximum number of majority directors. Shareholders who support minority candidates don’t like this outcome, but it’s just fair.

. . . .

While discretionary voting is controversial, if it is applied fairly, it has benefits for all shareholders.

C. Ahmasuk’s Letter And The Complaint

In early February 2017 — well before Sitnasuak’s annual shareholders’ meeting and at least two months before any director candidates were announced or any election-related materials were distributed to shareholders — Ahmasuk submitted the following opinion letter published in the Nome Nugget:

Dear Editor,

The Village Corporation for Nome i.e. Sitnasuak Native Corporation (SNC) will soon be holding its annual election and shareholders will file for candidacy. SNC's shareholders have voiced time and time again that they do NOT want discretionary proxies used. Discretionary proxies are NOT required by any Alaskan law and there is NO law that prohibits an ANCSA corporation from prohibiting them for elections. Hundreds of SNC shareholders have said through public letters, social media, or through mailings that they do NOT want discretionary proxies used for elections. I believe SNC shareholders are realizing that discretionary proxies are harmful to our election process and are realizing in greater numbers such practices are disrespectful to our traditions. In 2015 and 2016 I and others spent many hours collecting signatures for a request for a special meeting to do away with discretionary proxies. We collected hundreds of signatures and we met a 10% requirement as required by Alaskan law to petition the SNC Board of Directors to consider doing away with discretionary proxies and to request a special meeting. You might ask yourself why all this commotion about discretionary proxies? Because I and others have thoroughly researched the issue and recognized there is a dramatic ethical argument about what is right and what is wrong with SNC's elections. Discretionary proxies have allowed single persons to use discretionary proxies to dramatically alter the outcome of an election for their singular goal. You know who they are they are members of the SNC 6. Please do NOT vote a discretionary proxy in 2017. Thank you[.] (Emphases in original.)

A Sitnasuak director complained to the Division that Ahmasuk’s letter was a proxy solicitation seen by more than 30 people.[30] The director alleged that Ahmasuk therefore had violated proxy solicitation regulations by (1) not concurrently filing required disclosures with the Division[31] and (2) making false and misleading statements about discretionary proxy use.[32]

D. Administrative Proceedings And Division Decision

The Division notified Ahmasuk of the complaint, later asking him whether he had filed his letter with the Division and whether he could support his substantive assertions about proxy voting. Ahmasuk responded that the proxy regulations did not apply because his letter was published prior to candidate and proxy announcements for the upcoming election. Ahmasuk also contended that the regulations are nebulous and that the investigation violated his First Amendment free speech right. Ahmasuk said that, based on his personal experience and assessment of past elections, he believed his statements, including his contention that discretionary proxies allowed individuals to alter election outcomes, were factual.

In mid-March — still before any director candidates were announced or any annual meeting election-related materials were distributed to shareholders — the Division issued an order concluding that Ahmasuk’s letter was a proxy solicitation requiring AS 45.55.139 disclosures. The Division’s order stated that Ahmasuk thus had violated 3 AAC 08.307 by failing to file a copy of the letter with the Commissioner and 3 AAC 08.355 by failing to file required disclosures. The Division also concluded that Ahmasuk had violated 3 AAC 08.315(a) by making the material misrepresentation that discretionary proxies have allowed individuals to alter election outcomes. The Division ordered Ahmasuk to pay a $1,500 civil penalty and to comply with Alaska securities laws and regulations.

Ahmasuk appealed the order, requesting a hearing and that the order be set aside.[33] He listed three grounds for setting aside the decision, arguing that his letter was: (1) protected by the First Amendment as political speech; (2) not a proxy solicitation; and (3) not false or misleading. The parties agreed to address as a threshold matter whether Ahmasuk’s letter was a proxy solicitation subject to regulation and to allow appellate proceedings to conclude on that issue before later, if necessary, addressing whether Ahmasuk’s letter contained a material misrepresentation.

Ahmasuk sought summary adjudication on the proxy solicitation question. The thrust of Ahmasuk’s argument was that his letter could not qualify as a proxy solicitation because it “was not ‘reasonably calculated to result in the procurement, withholding, or revocation of a proxy.'” Ahmasuk contended that a reasonable reading of the proxy solicitation regulation “does not alert a shareholder that [it applies] to public statements about the election process in general . . . when no candidates have been announced, no individuals . . . are asking shareholders to sign proxies . . . , and no shareholder vote on a particular matter is scheduled.” Ahmasuk also contended that if the proxy solicitation regulation covered his letter, the regulation would violate his constitutional due process and free speech rights.

Following briefing and oral argument, the Administrative Law Judge (ALJ) upheld the Division’s order. The ALJ’s decision noted the following undisputed facts: Ahmasuk’s letter was written two months before the identification of candidates and five months before the election; his letter did not explicitly advocate for or against any distinct outcome of the election; and his letter urged shareholders not to vote by discretionary proxy. The ALJ focused on one sentence from the letter — “Please do NOT vote a discretionary proxy in 2017” (emphasis in original) — noting the Division’s agreement at oral argument “that the letter would not constitute a proxy solicitation if it did not include [that] sentence.”

The ALJ ultimately concluded that the sentence in Ahmasuk’s letter fit within the regulatory definition of a proxy solicitation because it was “both a direct request to not execute a discretionary proxy, as well as a communication reasonably calculated to result in the withholding of a discretionary proxy.” The ALJ rejected Ahmasuk’s free speech challenge, noting that “Ahmasuk did not stop at simply communicating his position — he requested that . . . shareholders not vote a discretionary proxy.” The ALJ also rejected Ahmasuk’s due process challenge, quoting the regulation and stating that “[i]t seems reasonable that a reader of this regulation would understand that an actual request to withhold a type of vote, as in . . . Ahmasuk’s letter, falls within the definition.” The ALJ’s decision ultimately became the Division’s final decision.[34]

E. Superior Court Proceedings

Ahmasuk appealed to the superior court, reiterating his legal arguments. The superior court first rejected Ahmasuk’s argument that the proxy solicitation regulation cannot apply absent identifiable candidates, proxy forms, and an election. The court concluded that the “regulatory scheme provides for broad application” and that Ahmasuk’s interpretation would defy common sense and the regulation’s plain language.

The superior court next rejected Ahmasuk’s argument that the regulation, as applied, violated his constitutional right to due process. The court reasoned that the regulatory language defining solicitation as “distributing . . . communication to shareholders under circumstances reasonably calculated to result in the . . . withholding . . . of a proxy” offered fair notice that communicating with shareholders and urging them to withhold proxies could be deemed a proxy solicitation. The court contrasted Ahmasuk’s concern “that under a broad and inclusive reading of . . . solicitation every disparaging comment by a shareholder will be treated as a proxy statement because it might influence a shareholder vote,” with his letter “specifically referencing the upcoming election, specifically urging sharehold[ers] to withhold a proxy.” The court concluded that the regulations were clear, instructive, and provided fair notice that a statement like Ahmasuk’s letter could be considered a proxy solicitation and that failure to register merited a fine.

The superior court also rejected Ahmasuk’s argument that the Division’s application of the proxy solicitation regulations violated his freedom of speech. Noting the government’s compelling interest in regulating election integrity and citing case law suggesting proxy solicitation regulations do not violate the constitution’s free speech guarantee,[35] the court concluded that even statements not advocating for or against a particular candidate may be regulated as proxy solicitations.

F. Appeal

Ahmasuk appeals the superior court’s decision. The Division’s position is supported by amici curiae Bristol Bay Native Corporation, Calista Corporation, Cook Inlet Region, Inc., and Doyon Limited. Sitnasuak did not participate in the Division proceedings, the superior court appeal, or this appeal.

III. STANDARD OF REVIEW

“When the superior court has acted as an intermediate court of appeal, we review the merits of the administrative agency’s decision without deference to the superior court’s decision.”[36] The parties dispute which standard of review should govern our consideration of the Division’s regulatory interpretation and conclusion that Ahmasuk’s letter was a proxy solicitation. The Division and Amici argue that we should employ a deferential standard of review for this threshold question. Ahmasuk argues that we should not defer to the Division’s interpretation of the regulations.

We generally employ the following standards of review when considering an agency action based on its interpretation of its statutory directives and regulations:

We apply the reasonable basis standard to questions of law involving "agency expertise or the determination of fundamental policies within the scope of the agency's statutory functions." When applying the reasonable basis test, we "seek to determine whether the agency's decision is supported by the facts and has a reasonable basis in law, even if we may not agree with the agency's ultimate determination." We apply the substitution of judgment standard to questions of law where no agency expertise is involved. Under the substitution of judgment standard, we may "substitute [our] own judgment for that of the agency even if the agency's decision had a reasonable basis in law."

. . . We review an agency's interpretation and application of its own regulations using the reasonable basis standard of review. "We will defer to the agency unless its 'interpretation is plainly erroneous and inconsistent with the regulation.'" "We give more deference to agency interpretations that are 'longstanding and continuous.'"[37]

Because our conclusion would be the same regardless of the standard of review, we express no opinion on the parties’ disagreement. We explain our decision using the more deferential standard.

IV. DISCUSSION

The fundamental question before us is whether the Division’s interpretation and application of its definition of “solicitation,” as it relates to the definition of “proxy,” is reasonable under the facts and circumstances of this case. Both the statute and the Division’s regulations define “proxy” as “a written authorization . . . signed by a shareholder . . . giving another person power to vote” the shareholder’s shares.[38] The regulations also provide that the written document “may take the form of a consent, revocation of authority, or failure to act or dissent.”[39]

For our purposes, then, a proxy is a written authorization or consent, or a written revocation of an authorization or consent, for someone to vote a shareholder’s shares. This is reinforced by 3 AAC 08.365(16)’s two-pronged definition of proxy “solicitation”: under (A), “a request to execute or not to execute, or to revoke a proxy”; and under (B), a “communication to shareholders . . . reasonably calculated to result in the procurement, withholding, or revocation of a proxy” (emphasis added). We are concerned only with a putative solicitation of a proxy execution or revocation for Sitnasuak’s 2017 director election.[40]

With this in mind, to see how a Sitnasuak shareholder would execute and make a designation for directed or discretionary voting on a proxy card solicited by Sitnasuak’s board of directors months after Ahmasuk’s opinion letter, Sitnasuak’s official proxy card for the June 2017 annual shareholder meeting’s election of four directors is reproduced, in relevant part, below.

We also note that in May 2017, after the initiation of the enforcement action underlying this appeal, three Sitnasuak shareholders, including the Sitnasuak director who filed the complaint against Ahmasuk, solicited proxies to vote for themselves as directors at the 2017 annual meeting. This group’s proxy card was designated a “Discretionary Proxy Card” and conferred authority to use discretionary cumulative voting to elect as many of the three shareholders “as [a] proxy holder decides is appropriate.” But the card instructed that a shareholder could withhold authority to vote for one or more of the three candidates by striking out the candidate’s name, and, of course, a shareholder also could have specified how to allocate the votes.[41] This proxy card is set out in relevant part below.

Independent Shareholder Solicited Discretionary Proxy Card

For the Sitnasuak Native Corporation Annual Meeting of Shareholders

I appoint [Names Redacted] with full power of substitution, to represent me as my proxy and to vote my shares in accordance with the instructions in this document at the [June 2017] Annual Meeting of Shareholders of Sitnasuak Native Corporation . . . and at any adjournment thereof.

INSTRUCTIONS TO PROXY HOLDER

For the election of directors, my proxy holder is instructed to cumulate and distribute my votes among the following people, to elect as many to the Sitnasuak Native Corporation Board of Directors as my proxy holder decides is appropriate.

[Names Redacted]

(You may withhold authority to vote for a nominee by lining through or otherwise striking out the name of that nominee).

For other matters, my proxy holder is given discretionary authority to vote my shares on matters incident to the conduct of the meeting and on any other matter, not specifically addressed by this proxy, which may properly come before the meeting.

I have received the Sitnasuak Native Corporation 2016 Annual Report and the Notice of Annual Meeting & Proxy Statement dated April 7, 2017, and a Supplemental Proxy Statement from the proxy holder named above.

[Signature Execution Block Redacted]

[Proxy Submission Instructions Redacted]

As we analyze the Division’s application of its proxy solicitation regulation to Ahmasuk’s opinion letter, context is key. The important contextual backdrop in this case is the longstanding corporate governance debate about Sitnasuak’s allowing discretionary cumulative proxy voting for corporate director elections. How are shareholders supposed to debate the issue without what the Division contends is a “communication to shareholders . . . reasonably calculated to result in . . . withholding” some future proxy?[42] For example, how could a group of Sitnasuak shareholders even have prepared and submitted a petition for a corporate charter change eliminating discretionary cumulative voting for directors without coming within the Division’s broad interpretation of its solicitation definition? To avoid penalties, must such petition communications and related statements asking shareholders to use direct and not discretionary proxy forms be filed with the Division as a proxy solicitation, along with other burdensome requirements? Surely not.

For example, compare Ahmasuk’s letter with Sitnasuak’s newsletter. Both reference the shareholder debate about discretionary proxy voting. And both reference dissatisfied shareholders’ efforts to call a special shareholders’ meeting for a vote on eliminating discretionary proxy voting. With respect to the effect of discretionary proxy voting, Sitnasuak said:

Directed votes can't be changed. . . .
. . . .
. . . Shareholders who are able to attend a meeting in person have the opportunity to change their votes and help a candidate who doesn't have enough proxy votes to potentially be elected to a board seat. That's also what a proxy holder can do with a discretionary proxy. (Emphasis added.)

Consistent with Sitnasuak's statement, but using different terms about discretionary proxy holders being able to change votes to get a desired result, Ahmasuk said: "Discretionary proxies have allowed single persons to use discretionary proxies to dramatically alter the outcome of an election for their singular goal."

Under the Division’s regulatory interpretation, Sitnasuak’s newsletter could be seen as reasonably calculated to result in the eventual procurement of a future discretionary proxy card, or at least the eventual box-check for discretionary proxy voting on the corporate proxy card. The record reflects that Sitnasuak did not file its newsletter with the Division when it was circulated to shareholders and that Sitnasuak faced no enforcement action by the Division. Indeed, the ALJ noted that “[t]he Division’s interpretation at oral argument appear[ed] at odds with other Division decisions on the same issue,” lending credence to Ahmasuk’s argument that the regulation was “subject to inconsistent enforcement.”

The federal Securities and Exchange Commission (SEC), when defining solicitation, considered the impact of excessive proxy solicitation regulation on corporate governance debate.[43] Because the Division apparently adopted the SEC’s then-existing solicitation definition when promulgating the Division’s definitions regulation,[44] the SEC definition’s history provides insight. In 1935 the SEC first defined solicitation to include any “request for a proxy, consent, or authorization, or the furnishing of any form of proxy.”[45] In 1938 the SEC amended the definition to include any proxy request, regardless whether “accompanied by or included in a written form of proxy.”[46] In 1942 the SEC revised the definition to include any request “reasonably calculated to” cause a shareholder to execute, not to execute, or to revoke, a proxy.[47]

Most pertinent to this case, in 1956 the SEC definition expanded to include “furnishing of a form of proxy or other communication to security holders under circumstances reasonably calculated to result in the procurement, withholding, or revocation of a proxy.”[48] In adopting what essentially is a parallel provision to 3 AAC 08.365(16),[49] the SEC primarily was targeting communications by those who intended to solicit or already had solicited proxies before formally beginning solicitation.[50] The SEC apparently was seeking “to address abuses by persons who were actually engaging in solicitations of proxy authority in connection with election contests.”[51]

But the SEC later acknowledged its “proxy rules ha[d] created unnecessary regulatory impediments to communication among shareholders and others and to the effective use of shareholder voting rights.”[52] The SEC was concerned that the solicitation definition, too broadly construed, could “turn almost every expression of opinion . . . into a regulated proxy solicitation.”[53] It recognized that excessive regulation had “a chilling effect on discussion of management performance”[54] and raised First Amendment free speech concerns, particularly in regulating persons who are not in fact soliciting proxy authority.[55] The SEC clarified that when it adopted the 1956 definition it did not intend to regulate “persons who did not ‘request’ a shareholder to grant or to revoke or deny a proxy, but whose expressed opinions might be found to have been reasonably calculated to affect the views of other shareholders positively or negatively toward a particular company and its management or directors.”[56] Thus in 1992, to better achieve the proxy regulations’ purposes, the SEC adopted amendments significantly narrowing the “excessive regulatory reach of ‘solicitation.'”[57]

We share similar concerns about this case, namely that the Division’s broad regulatory interpretation contravenes the proxy regulations’ purposes and stifles corporate governance debate. If the solicitation regulation can cast such a wide net that it applies without regard to whether there actually is a pending election with known director candidates and proxy cards circulating (or known to be circulating imminently) for shareholder signatures, then the regulation may well go beyond valid regulation and into free speech infringement.[58]

And it would be difficult to enforce even-handedly. For example, the Division conceded it has no regulatory interest in whether an ANCSA corporation shareholder votes in person or by proxy in director elections, and presumably the Division has no regulatory interest in whether an ANCSA corporation allows or disallows discretionary cumulative voting in director elections. But the Division responded to our questioning at oral argument by saying that it would be a “technical” violation — apparently meaning unlikely to be enforced — if a shareholder communicated a general desire that all shareholders attend an annual meeting in person rather than give someone a proxy. There are few shades of gray between that hypothetical and Ahmasuk’s communicated general desire that, if a shareholder grants a proxy, it should be a directed rather than discretionary proxy.[59]

Consider again the undisputed facts of this case. Ahmasuk wrote his letter in February; Sitnasuak’s annual shareholder meeting was not held until the summer. Although in February shareholders knew that an annual shareholder meeting and director election would take place sometime in the future, no director candidates had been announced, no required corporate or other election-related disclosures had been circulated, and no proxy cards had been circulated. Because no proxy card was available — or known to be soon available — for shareholders’ execution, nothing concrete existed for Ahmasuk to ask a shareholder to execute, not execute, give, or withhold.[60] And Ahmasuk was neither running as a director candidate nor asking to be a proxyholder.

To the extent the Division viewed Ahmasuk’s opinion letter as directed at a specific proxy card, it could have been only the expected annual Sitnasuak official proxy card.[61] As discussed, the allegedly offending sentence in Ahmasuk’s letter was a request that shareholders “NOT vote a discretionary proxy.” (Emphasis in original.) But Sitnasuak’s proxy card is no more a “discretionary proxy card” than it is a “directed proxy card”; it allows a shareholder to check a box for either form of voting. The proxy card must be filled out with a shareholder’s instructions and then executed; Ahmasuk did not ask that the upcoming Sitnasuak proxy card be executed, not executed, given, or withheld; he effectively asked only that shareholders not check the discretionary proxy voting box.[62] In the context of this case, and at its broadest, the solicitation regulation governs only seeking the execution or non-execution of a proxy.[63] If the Division predicated its enforcement action on Ahmasuk’s statement being directed to the then unissued Sitnasuak official proxy card, the Division’s solicitation definition does not seem to cover his statement.

And the Division’s interpretation appears to conflict with its regulations describing the effect of “withholding a proxy.” Although the term is not expressly defined, a regulation describing proxy requirements clearly explains what must be provided on a proxy form for director elections:

(A) a box opposite the name of each nominee which may be marked to indicate that authority to vote for that nominee is withheld;

(B) an instruction that the shareholder may withhold authority to vote for a nominee by lining through or otherwise striking out the name of that nominee; . . . .[64]

The term “proxy” refers to “a written authorization . . . to vote”;[65] regulatory language describing “withhold[ing] authority to vote” on a physical proxy card thus appears to describe at the voting level what it means to “withhold . . . a proxy” under 3 AAC 08.365(16)(B). And it refers to the act of not voting for a specific candidate by checking a box or “striking out the name of that nominee.” Ahmasuk’s opinion letter did not ask anyone to make or withhold specific votes in a proxy card.

This is a logical interpretation when compared to the other acts listed in 3 AAC 08.365(16), as striking out a specific nominee’s name — i.e., voting against that candidate — would be the direct inverse of “procur[ing]” or “execut[ing]” the authority to vote for a specific candidate. Any broader reading would lead to absurd results. Again, would Ahmasuk have violated these provisions if, for example, he instead had implored shareholders to simply vote in person? If not, why would imploring shareholders to vote by directed proxy rather than discretionary proxy have a different result? Although the ALJ noted that “any proxy type may significantly affect an election,” impact alone does not constitute a proxy solicitation.

The Division’s interpretation and application of its proxy solicitation regulation are unreasonable on the facts of this case.[66] Without reaching the constitutional issues Ahmasuk raises, we reverse the superior court’s decision upholding the Division’s order sanctioning Ahmusuk. We remand to the superior court to dismiss the Division’s complaint against Ahmasuk and to reevaluate prevailing party status for purposes of an attorney’s fees award.[67]

V. CONCLUSION

We REVERSE the superior court’s decision upholding the Division’s order sanctioning Ahmasuk and REMAND for further proceedings consistent with this opinion.

I. INTRODUCTION

A winning candidate for a seat on the board of directors of an Alaska Native Corporation declined to sign the corporation’s confidentiality agreement and code of conduct. When the corporation denied him a seat on the board, he sought a declaratory judgment that these agreements are unlawful and an injunction that he be seated on the board. He argues that the scope of the confidentiality agreement is so broad, and the code of conduct so apt to be used to suppress dissenting directors, that they are inconsistent with directors’ fiduciary duties to the corporation. Because he does not challenge the application of these agreements to any concrete factual situations, we conclude that his claims are not ripe for adjudication. We therefore affirm the judgment and the award of attorney’s fees against him.

II. FACTS AND PROCEEDINGS

A. Facts

The Eyak Corporation is the Alaska Native Village Corporation for Cordova, formed pursuant to the Alaska Native Claims Settlement Act.[1] Eyak’s board is made up of nine members who serve staggered three-year terms; each year, three directors are up for election. Eyak’s bylaws require several qualifications to serve on the board. Only one qualification is in dispute here: “Any person who is elected or selected to be a Director shall be seated as a Director only after he or she executes an acknowledgment agreeing to comply with the Corporation’s code of conduct and executes the Corporation’s confidentiality agreement.” The requirement to execute these two documents (collectively referred to as the Agreements) has been in place since 2012.

Lucas Borer previously served on the Eyak board from 1985-1989 and ran for the board again unsuccessfully in 2012, 2015, 2017, and 2018. In 2015 Borer corresponded with the chair of Eyak’s board of directors, criticizing Eyak’s bylaws and the Agreements. Eyak declined to amend its governing documents at that time.

Borer ran again in 2019. At the top of the candidate application form, the qualifications for directors were clearly stated. Borer signed the form, right below a statement that read: “I understand that the information set forth above will be relied upon by The Eyak Corporation in the preparation of its election materials for the upcoming Annual Meeting of Shareholders.”

Borer received enough votes in the election to win one of the three available seats on the board. At a board meeting following the election Borer and the two other winning candidates were asked to execute the Agreements before they were seated. Borer asked for more time to review the Agreements with his counsel before he signed them. Because Borer did not execute the Agreements at the meeting, Eyak did not allow him to be seated as a director at that time.

The chair of Eyak’s board of directors sent Borer a letter congratulating him on his election, attaching the Agreements, and advising him that he must execute the Agreements to qualify to be seated as a director under the bylaws. The chair emphasized that the board wanted “to make sure the shareholders who voted for [Borer] are not disenfranchised while timely-seating elected directors and avoiding vacant seats on the Board.” The chair requested that Borer execute the Agreements by May 28, 2019, or else Eyak would “proceed to fill the vacancy.”

Four days before the execution deadline, Borer responded with a letter addressed to the board. Borer claimed that he had been pressured to sign the Agreements and that, “[h]aving seen . . . a similar document in the past, [he] suspected that this one would similarly attempt to take away or reduce [his] rights as a board member.” Borer then outlined numerous issues with the Agreements that he claimed would result in breach of fiduciary duty and violation of Alaska law — including many that are now the basis for his appeal. Borer stated that although he “completely underst[ood] the need for a reasonable Code of Conduct” he claimed that the Agreements “effectively prohibit any communication between a director and a shareholder.”[2] He maintained that he was not required to sign the Agreements to qualify for the board, asserting that he had “legitimate and legal reasons for not signing the [Agreements]” and that executing the Agreements “would represent an abdication of [his] responsibilities as a director.”

Eyak responded in a June 27 letter to Borer stating that it had revised the Agreements in response to his concerns. Eyak gave Borer a new deadline of July 11 to execute the revised Agreements and again notified him that if he failed to do so, the board would give his seat to someone else.

Borer did not sign the Agreements prior to the July 11 deadline; it appears that he never responded at all. On July 17 Eyak notified Borer that it had seated another eligible candidate as director to fill the vacancy.

Borer’s attorney sent a letter to Eyak demanding that Borer be seated on the board. The letter stated that “[i]nviting shareholders to vote for an ineligible candidate is a misleading proxy solicitation” and reiterated many of Borer’s concerns from his earlier letter to the board. He also proposed further revisions to the Agreements.

Eyak refused Borer’s demand. Citing its bylaws, Eyak stated that it had “been clear with its shareholders and Mr. Borer at every step of the nominations and election process that only eligible candidates who execute [the Agreements] will be qualified to be seated as directors.”

B. Proceedings

Borer filed a complaint for declaratory and injunctive relief in the superior court. Borer sought “a declaratory judgment stating he remains a duly elected [Eyak] director and an injunction requiring [Eyak] to seat him on its board.” He claimed that he was validly elected and that signing the Agreements “would reduce or eliminate his ability to exercise his fiduciary duty to the corporation.” Borer also took issue with various enforcement provisions of the Agreements, including provisions that he claimed would “eliminate the director’s ability to participate in board meetings and eliminate the director’s statutory right to inspect corporate information.” Borer also filed a motion for preliminary injunction directing that Eyak seat him as director. In that motion, Borer stated “he had just been handed [the Agreements] th[e] morning” of the board election.

Eyak opposed the motion for preliminary injunction and disputed Borer’s characterization of the facts. Eyak argued that Borer had “full knowledge of the Code of Conduct and Confidentiality Agreement’s provisions and purpose,” pointing to several pieces of evidence: a newsletter issued to shareholders describing Eyak’s director confidentiality agreement; Borer’s previous campaigns for the director seat; correspondence between Borer and the chair of the board regarding the Agreements in 2015; and the fact that Borer had “affirmatively represented his agreement to be bound by those documents in the event he was elected when he signed and returned the 2019 Candidate Application Form.”

The superior court denied Borer’s motion for preliminary injunction. The court first noted that “[w]hen this court read Mr. Borer’s opening motion, this court was left with the impression that Mr. Borer had no prior notice of the Code of Conduct, that the document was essentially thrust upon him minutes before the vote, and that the document may even have been drafted or at least revised specifically to limit him if he won,” but that Eyak’s opposition and attached exhibits “ma[de] clear that that was not the case.” The court ruled that Borer had not met his legal burden of demonstrating either a “clear showing of probable success on the merits” or “substantial questions going to the merits of the case.” It found that “Borer [had] not shown that he will suffer irreparable harm, or that [Eyak] won’t.” It also found that Eyak could be irreparably harmed if Borer were seated without signing the code of conduct because the code “insures against a director improperly disclosing . . . confidential corporate business opportunities.” Borer moved for reconsideration, which the superior court denied.

Eyak then moved for summary judgment, arguing that Borer was not qualified to be seated as a director due to his failure to sign the Agreements and that its code of conduct and confidentiality agreement do not violate Alaska law. Eyak argued that Borer “asks for the extraordinary: invalidation of a corporation’s bylaws based on a series of hypothetical events and the removal of a qualified, sitting director to seat an unqualified director.”

The superior court heard oral argument and subsequently granted summary judgment to Eyak in a decision on the record. The court stated without elaboration that “[e]verything is ripe” for adjudication. The court then determined that “[t]here are no disputed material facts,” observing that Borer had refused to sign Eyak’s Agreements despite agreeing to do so on the candidate application form and that signing the Agreements was a requirement to become an Eyak director. The court also determined, pointing generally to “Alaska statutes that permit [corporate] bylaws to define . . . codes of conduct and board governance,” that Eyak’s requirement to sign the Agreements was “a requirement that squares with the law.” The court also indicated that it viewed Borer’s challenges as merely hypothetical, referring to decisions of Delaware courts that declined to strike down corporate bylaws based on “hypothetical risk of harm.”[3]

Eyak moved for 20% of its attorney’s fees under Alaska Civil Rule 82(b)(2), which the court granted. Borer appeals the grant of summary judgment, the denial of his motions for summary judgment and preliminary injunction, and the award of attorney’s fees.

III. STANDARD OF REVIEW

We review a grant of summary judgment de novo.[4] Whether an issue is ripe for adjudication is a legal determination that we consider de novo.[5] We review an award of attorney’s fees for abuse of discretion[6] and will reverse “only if the award is ‘arbitrary, capricious, manifestly unreasonable, or stems from improper motive.'”[7]

IV. DISCUSSION

A. Borer’s Challenge To The Corporation’s Code Of Conduct And Confidentiality Agreement Is Not Ripe For Adjudication.

Borer’s claim that he was validly elected as a director hinges upon his view that the Agreements are unlawful. Eyak’s bylaws required Borer to sign the Agreements in order to be seated as a director,[8] and when Borer refused to do so, Eyak in turn refused to seat Borer. Borer argues that because the Agreements are unlawful, the bylaws’ requirement that he sign them cannot lawfully be enforced,[9] so Eyak had no valid grounds to refuse to seat Borer as director.[10]

A threshold issue in this case is which versions of the Agreements are relevant in this dispute: the versions in effect when Borer was initially elected in May 2019, or the versions that Eyak revised in June 2019 in response to Borer’s concerns. Borer argues that the earlier versions of the Agreements are relevant because they were in effect when his qualifications as a director were being determined at the May 2019 board meeting. That is not correct. The board revised the agreements in light of Borer’s concerns and then gave him an opportunity to be seated as a director if he signed them. In other words, Eyak determined Borer was not eligible because he did not sign the revised agreements. We therefore consider the revised Agreements in our analysis.

Borer’s argument in a nutshell is that were he to sign the Agreements as a condition of being a director of the board, the Agreements would impermissibly burden his ability to fulfill his fiduciary duties to the corporation. Under Alaska law a director has a fiduciary duty to act in good faith, to act in a manner he or she reasonably believes to be in the best interests of the corporation, and to act with care.[11] Borer identifies six aspects of the Agreements he was required to sign that, in his view, would preclude him from fulfilling those duties:

(1) the lack of reporting procedures for illegal activity;
(2) the failure to provide for an impartial disciplinary tribunal;
(3) the scope of the confidentiality agreement;
(4) the requirement to acknowledge that the Board acts “as a group and not individuals”;
(5) the sanction of withholding travel funds; and
(6) the sanction of restricting a director’s access to confidential information.

The first two problems can be addressed summarily. Borer’s argument that the confidentiality agreement makes no exception for reporting illegal activity is based on the prior version of the agreement that is no longer in effect. In response to Borer’s concerns, Eyak added language clarifying that its confidentiality code does not “limit [a director’s] duty to report a violation of law.” As explained above, it is the updated version of the Agreements we are reviewing on appeal. Therefore this particular critique is moot, and we decline to address it.[12]

Borer’s second argument is that the corporation’s disciplinary process for board members does not provide an impartial tribunal and therefore violates the Due Process Clause of the Fourteenth Amendment. But Borer waived this argument[13] by failing to raise it before the superior court.[14]

The remainder of Borer’s challenges are not ripe for adjudication.[15] Borer asks this court to strike down a corporation’s internal governance rules even though those rules have not yet been applied to him in a concrete factual scenario. Eyak, citing Delaware law, argues that Borer cannot challenge corporate internal rules based on hypothetical abuses. Although Eyak is correct that Delaware courts “typically decline to decide issues . . . that create hypothetical harm,”[16] we see no need to adopt Delaware rules here. Our ripeness doctrine aptly deals with the question of whether it is appropriate to render declaratory judgment based on hypothetical applications of the challenged law.

Alaska’s declaratory judgment act requires there be an “actual controversy” for a court to issue declaratory relief.[17] This requirement “reflects a general constraint on the power of courts to resolve cases,”[18] cautioning that courts should not “resolve abstract questions of law.”[19] Ripeness is an element of the “actual controversy” requirement.[20]

A ripe suit will present “a substantial controversy, between parties having adverse legal interests, of sufficient immediacy and reality to warrant the issuance of a declaratory judgment.”[21] The primary concern of ripeness is “whether the case involves uncertain or contingent future events that may not occur as anticipated, or indeed may not occur at all.”[22] The doctrine of ripeness thus “requires a plaintiff to claim that either a legal injury has been suffered or that one will be suffered in the future.”[23] There is no “set formula” for determining ripeness.[24] Instead, we balance “the fitness of the issues for judicial decision” with “the hardship to the parties of withholding court consideration.”[25] As a part of this balancing test, we consider whether “concrete factual scenarios” would assist in bringing about the “ultimate resolution of the issue before us.”[26]

In State v. ACLU of Alaska the plaintiffs brought a pre-enforcement suit challenging the constitutionality of a state statute prohibiting marijuana possession.[27] We held that the challenge was unripe.[28] We assessed hardship, which we determined was “slight” because the sole hardship alleged — the risk of criminal liability for marijuana possession — already existed under federal law prohibiting marijuana possession.[29] We assessed fitness for decision, emphasizing that our analysis about the statute’s constitutionality “could be aided by one or more concrete factual scenarios.”[30] We discussed the possibility of “cases where . . . the statute could permissibly be applied” without constitutional problem, reasoning that adjudication of “an actual case, or several actual cases” could cast the issues presented “in a different light.”[31] We concluded that given the potential for concrete facts to aid the decision and the limited hardship to the parties of withholding a decision, the case was not ripe for adjudication.[32]

In this case, too, the risks of making a decision without concrete facts outweigh the harm of withholding a decision. There is no doubt that Borer will suffer some hardship if we decline to adjudicate his claims: he will lose his legal claim to a directorship on Eyak’s board and the incumbent rights and duties that he would gain as a director. Yet it is worth noting that Borer has contributed to this hardship himself by rejecting the Agreements out of hand without waiting to see whether they would actually place him in a position of being unable to fulfill his fiduciary duties. And this hardship for Borer must be weighed against the fitness of his claims for adjudication.

Because Borer does not allege any concrete factual scenarios where the Agreements are being applied, he fails to show precisely how, and to what degree, the Agreements are in tension with a director’s fiduciary duties. Although it is certainly possible to imagine overbroad or abusive applications of these Agreements, his “pre-enforcement” challenge leaves us uncertain whether the Agreements would actually be used in those ways. Indeed, there is far greater uncertainty about how the relatively general terms of these Agreements would be applied to specific factual scenarios than there was when we concluded that a pre-enforcement challenge to laws prohibiting marijuana possession was unripe.[33] Borer’s claims require us to decide whether Eyak’s Agreements are in irreconcilable tension with a director’s fiduciary duties. As explained in detail below, we cannot confidently answer that question without seeing how the challenged terms of these agreements are applied to real-world situations.

1. Scope of the confidentiality agreement

Borer argues that Eyak’s confidentiality agreement is overbroad. The agreement states, in relevant part:

1. I understand and acknowledge that as a director of the Corporation, I will review and consider a variety of confidential and sensitive information. “Confidential Information” may include any number of different forms, and includes, but is not limited to business, operation, finance, strategic, personnel, litigation, executive session, and other proprietary information of The Eyak Corporation and its subsidiaries and affiliates. . . . Confidential Information does not include information that has been made public by the Corporation. I agree that if I am unsure whether information is confidential, I will treat it as confidential.
. . . .
3. I will keep all Confidential Information private and confidential, and will use my best efforts to prevent inadvertent or unauthorized disclosure. I will not, without prior written consent of the Corporation, disclose Confidential Information to anyone. I will only use Confidential Information in furtherance of my duties as a Director.

Borer claims that the expansive definition of "confidential information" in the agreement would render "literally anything" confidential, so that signing the agreement could prevent him from discussing even innocuous matters like "the outlook for the coming fiscal year" with shareholders. He argues that this will prevent him from representing and advocating for shareholders on the board.

At the outset we observe that a board of directors has a duty of “complete candor to its shareholders to disclose all germane or material information,” and this duty “applies to matters of corporate governance as well as to corporate transactions.”[34] We presume Eyak’s board is aware of this general fiduciary duty and that the confidentiality agreement will be construed and applied in light of this duty.

Borer’s argument relies on Pederson v. Arctic Slope Regional Corp., in which we determined that a corporate confidentiality agreement was “unreasonably broad” as applied to a shareholder’s request for corporate documents.[35] When the shareholder refused to sign a confidentiality agreement, the corporation withheld requested documents from the shareholder.[36] We recognized a confidentiality agreement may be appropriate if it “reasonably defines the scope of what is confidential information subject to the agreement” and has provisions “that are not unreasonably restrictive in light of the shareholder’s proper purpose and the corporation’s legitimate confidentiality concerns.”[37] Applying those standards to the specific documents requested by the shareholder, we concluded that the confidentiality provisions were “unreasonably restrictive, at least as they related to executive compensation and stock interests” especially taking into account the burden these restrictions placed on the shareholder’s purpose of “making use of disclosed information to organize his fellow shareholders to restrict” certain types of transactions by the corporation’s executives.[38]

Pederson is distinguishable because we could determine in that case whether the confidentiality provisions were reasonable as applied to specific information sought for a particular purpose. We do not have those concrete facts here. Instead we have a range of information that might be deemed confidential. According to the confidentiality agreement, confidential information “may include” information from various categories such as “business, operation, finance, strategic, personnel, litigation, executive session, and other proprietary information,” but the agreement does not suggest that all information within these categories will be deemed confidential. Each category covers a wide range of information, and the justification for treating particular types of information within each category will vary significantly. For example, the category of “litigation” information includes attorney-client confidences as well as information stated in documents filed in court. It is unquestionably proper to treat the former type of information as confidential, and unquestionably improper to treat the latter as confidential (as court-filed documents have already been publicly disclosed). Because we are not presented with a situation in which Eyak has deemed specific pieces of information confidential, it is difficult to assess the justification for that label, or how treating that information as confidential affects a director’s exercise of fiduciary duties.

This difficulty is compounded by the fact that a director’s fiduciary duties are themselves general maxims: to act in good faith, for the best interests of the corporation, and with due care.[39] Determining a director’s adherence to these duties is a highly fact-specific inquiry.[40] Accordingly, whether having to keep information confidential is compatible with a director’s fiduciary duties depends not only on what information is at issue, but also the specific factual circumstances that arguably require the director to disclose this information. Trying to decide whether the confidentiality agreement is compatible with a director’s fiduciary duties when we do not know what information has been deemed confidential and why the director believes it should be disclosed would substantially elevate the risk of an erroneous decision. For that reason, the question whether Eyak’s confidentiality agreement may in some instances be inconsistent with a director’s fiduciary duties to the corporation is not ripe for adjudication.

2. Director’s duty to acknowledge that director “shall not undermine public or shareholder confidence in the board” 

Borer challenges a provision in the code of conduct that requires directors to acknowledge that the Board acts “as a group and not individuals.” The relevant language reads:

[E]ach director shall: . . . acknowledge that the Board acts as a group and not individuals, and once the Board has acted, a director may seek change through Board action, but shall not undermine public or shareholder confidence in the Board or the Corporation.

Borer argues that the requirement is unlawfully restrictive because it would prohibit directors from publicly expressing dissent to shareholders, in contravention of directors’ fiduciary duties.

Without concrete facts, it is difficult to assess the degree of tension between the somewhat vague rule that a director may not “undermine public or shareholder confidence” in the board or corporation and the scope of a director’s fiduciary duties when the director disagrees with the action being taken. Under Alaska law a director has a fiduciary duty to act in good faith, to act in a manner the director reasonably believes to be in the best interests of the corporation, and to act with care.[41] Alaska law also recognizes a director’s “right to dissent” from corporate action, which may be recorded in the minutes of a board meeting or filed in writing immediately after the meeting.[42] But there is ample room for a director to register dissent from corporate action without undermining confidence in the board. No facts in the record suggest that this proviso would be used to “muzzle [the] minority” as Borer, quoting a Delaware case, asserts.[43] And we can envision circumstances in which enforcing this provision might be justified. The Delaware case Borer quotes provides one example: acting on one’s disagreement with a particular corporate action by trying to persuade investors to abandon the corporation would seem contrary to a directory’s duty of loyalty to the corporation.[44] In these circumstances, the corporation might be justified in finding that the director has violated this proviso and sanctioning the director accordingly. We decline to adjudicate the lawfulness of this proviso absent its application to concrete facts that can help us accurately resolve whether it is inconsistent with a director’s fiduciary duties to the corporation.

3. Board’s authority to sanction director by withholding travel expenses

A director has a fiduciary duty of care,[45] and habitual failure to attend board meetings may violate that duty.[46] Invoking this duty, Borer challenges two provisions in Eyak’s code of conduct that authorize withholding a director’s compensation and travel expenses if the director violates the code:

[A] director who is found through the [disciplinary] procedure to have violated the provisions of this Code of Conduct shall be subject to any or all of the following sanctions: . . . cessation of eligibility to receive all other forms of compensation including travel expenses.
. . .
[A] director who fails to (1) comply with all disclosure requirements . . ., (2) execute an acknowledgment agreeing to comply with this Code of Conduct, (3) execute the Corporation’s Confidentiality Agreement, or (4) swear an oath of allegiance to the Corporation . . ., shall be ineligible to receive meeting fees, and other forms of compensation, including travel expenses. Once the director’s failure has been rectified, he or she shall become eligible to receive all forms of compensation to which he or she is otherwise entitled as a director.

Borer argues that withholding travel reimbursement is an unlawful sanction because it would cause the sanctioned director to miss board meetings and therefore violate the director’s fiduciary duty.

The only fact that Borer has alleged to support this challenge involves a former director who told Borer he was “denied travel to board meetings and had to attend telephonically because of a dispute over his compliance with the code of conduct.” The fact of telephonic participation itself does not establish that the director’s ability to participate in board meetings was meaningfully hindered. Although Borer asserts in conclusory fashion that having to attend a meeting telephonically or virtually puts sanctioned directors at a disadvantage by reducing opportunities for participation, that is not an inevitable result of remote participation. And even if remote participation is somewhat less effective or unwieldy, it does not follow that these minor disadvantages result in a violation of the director’s duty of care.[47]

Absent concrete facts that illustrate precisely how remote participation in a meeting of the board of directors might impair a director’s fiduciary duty, we decline to adjudicate the lawfulness of withholding travel expenses as a sanction for noncompliance with the corporation’s rules for directors.

4. Board’s authority to sanction director by barring access to corporate information

Borer challenges a provision in the code of conduct that permits the board to sanction directors by barring them from reviewing any proprietary or confidential information. The relevant provision reads:

[A] director who breaches the Confidentiality Agreement . . . (demonstrated by a 2/3 vote of the remaining directors) shall not be entitled to review any proprietary or confidential information unless and until the Board determines the breach has been rectified.

Borer argues that this sanction would violate directors' statutorily protected "absolute right" to inspect corporate documents.[48]

Although we have not addressed whether this right is truly “absolute,”[49] Borer himself suggests that it is not. He argues that access to information may be restricted in some circumstances, such as when a director has “clear intent to use the documents to commit an egregious tort” against the corporation. His position is consistent with case law interpreting California’s virtually identical statute.[50] California courts have construed a director’s statutory “absolute” right to inspect corporate records to contain certain limitations.[51] California courts have held that “[t]o be entitled to inspect corporate records, directors must remain disinterested and independent in the performance of their fiduciary duties.”[52] Therefore “[t]he absolute right . . . is subject to exceptions and may be denied where a disgruntled director announces his or her intention to violate his or her fiduciary duties to the corporation, such as using inspection rights to learn trade secrets to compete with the corporation.”[53]

We decline to decide in a factual vacuum whether Alaska’s similar statute contains similar exceptions and whether this proviso of Eyak’s code of conduct is consistent with any such exceptions. In ACLU of Alaska we reasoned that the law prohibiting possession of marijuana might be subject to a “narrowing construction” that would “uphold the statute in cases directly involving the health and safety goals on which the statute is based.”[54] In answering the question of how the statute should be construed, we concluded that “[a]llowing the normal processes of adjudication to take place may be of assistance.”[55] The same is true here, when determining whether this corporate proviso may be lawful requires us to first construe the scope of the statutory right to inspection. Attempting to define those contours “in the absence of actual facts” would elevate the risk of erroneous decision.[56]

And as was true of the arguments in favor of deciding a preenforcement challenge in ACLU of Alaska, Borer’s fear that this proviso will be applied to him “may be speculative and overstated.”[57] Borer offers little reason to think that his concern is of “sufficient immediacy and reality to warrant the issuance of a declaratory judgment.”[58] Borer has submitted the affidavit of Jason Barnes, who served as a director from 2010 2013. Barnes stated that his efforts to obtain corporate records to “substantiate the annually reported financial figures of [Eyak] subsidiaries” was improperly denied by the Board’s chairman under the guise of a breach-of-confidentiality sanction. Barnes’s affidavit, taken as true, indicates that the chairman abused the sanction to hinder Barnes’s performance of fiduciary duties.[59] But the assertion of one instance of abuse almost a decade ago gives little support for us to conclude that there is substantial risk that two-thirds of the Eyak Board will vote, under false pretenses, to deny other directors’ statutory right to inspect corporate documents.

In sum, Borer’s challenges to Eyak’s corporate governance documents are not ripe for decision. Absent concrete facts, it is uncertain how they will be applied and whether these hypothetical applications would be unlawful. Borer’s position is, in effect, that any person elected to be a director of a corporation may obtain a declaratory judgment that particular corporate governance rules are invalid because they might be abused in specific factual situations that have not occurred yet and may not occur at all.

The ripeness doctrine cautions against precisely this approach because deciding cases in a factual vacuum creates risks of erroneous decisions and devotes judicial resources to problems that may never materialize.[60] We therefore decline Borer’s invitation to adjudicate these claims and affirm the superior court’s judgment for Eyak.[61]

B. It Was Not An Abuse Of Discretion To Award Eyak 20% Of Its Attorney’s Fees Under Civil Rule 82.

The superior court deemed Eyak the prevailing party and awarded it 20% of its attorney’s fees, totaling $17,780. Borer appeals this decision. He does not challenge the superior court’s prevailing party designation, but instead challenges the decision to award fees and the amount awarded.

A trial court has “broad discretion to award fees and to alter the amount it intends to award.”[62] When “the prevailing party recovers no money judgment,” Alaska Civil Rule 82(b)(2) instructs courts to “award the prevailing party in a case resolved without trial 20 percent of its actual attorney’s fees which were necessarily incurred.” Any award made pursuant to Rule 82 is “presumptively correct”[63] but “may be set aside for ‘compelling reasons.'”[64]

None of the reasons Borer offers for why the court should have reduced or eliminated the fee award is compelling. First, Borer claims that Eyak’s attorney “expressly threatened Borer regarding the fee award prior to this litigation.” But the only evidence in the record of a “threat” is the attorney’s letter notifying Borer that Eyak would not seat him as director. The letter alludes to the possibility of an adverse fee award, stating that Eyak was “confident that a court will not view Mr. Borer as a ‘public interest litigant.'” This statement was not improper: advising the opposing party of a financial cost of litigation, without more, is not some improper tactic warranting a reduction in attorney’s fees.[65]

Second, Borer appears to invoke Alaska Civil Rule 82(b)(3)’s subsection (I), which allows trial courts to consider “the extent to which a given fee award may be so onerous to the non-prevailing party that it would deter similarly situated litigants from the voluntary use of the courts.”[66] Borer challenges the fee award because “[Alaska] Natives are an economically disadvantaged group and a large fee award would seriously discourage similarly situated litigants”[67] and because “[f]ew, if any individual shareholders have the means or will to challenge the board.” We are not persuaded that the 20% fee award here, totaling $17,780, was “so onerous” that it would deter similarly situated litigants from bringing meritorious claims against a corporation.

Third, Borer invokes subsection (H), which allows trial courts to consider “the relationship between the amount of work performed and the significance of the matters at stake.”[68] Borer essentially claims that Eyak’s litigation costs were disproportionately high given the low stakes for Eyak in this case, indicating that Eyak prolonged litigation because of “motivation beyond the case at hand.” But Borer downplays what was at stake for Eyak in this case. Had Borer prevailed, Eyak’s ability to protect its interests through the confidentiality agreement and code of conduct for directors might have been impaired, making its confidences vulnerable. Given those stakes, we are not persuaded that Eyak inappropriately prolonged litigation to increase attorney’s fees.

Fourth, Borer appears to invoke financial hardship as an “equitable factor” under subsection (K).[69] Borer’s only assertion about his financial hardship is that he “lack[ed] [the] funds” to hire counsel for his appeal. Borer has not shown that this hardship was so compelling that the superior court abused its discretion in granting Rule 82’s default award.[70] Borer could afford to and did hire counsel in the proceedings below. As the party filing the lawsuit, Borer should have been aware of the burdens of litigation and its attendant expenses. And Borer’s extensive motion practice increased the amount of time spent on this case by both parties. We decline to find that the superior court abused its discretion based on Borer’s financial hardship.

Fifth, Borer again appears to invoke equity[71] and argues that fees should be reduced because he “gains no personal benefit regardless of the outcome.” But this is incorrect. Had he prevailed, Borer would have personally benefitted: he would have gained a seat on the board along with the attendant powers and compensation of a director, unburdened by the Agreements to which he objects.

Sixth, Borer argues that he should be “indemnified against legal fees” because had he won, he “would clearly be entitled to indemnification” under AS 10.06.490(c), which we have noted requires that “a corporation must indemnify a director who ‘has been successful on the merits or otherwise’ in defense of certain lawsuits.”[72] But Borer was not “successful on the merits or otherwise” in his lawsuit; besides, he never raised this argument before the superior court, so it is waived.[73]

Because Borer has not presented a compelling reason to reverse the superior court’s grant of attorney’s fees, we uphold the award.

V. CONCLUSION

We AFFIRM the superior court’s judgment and award of attorney’s fees for Eyak.

MEMORANDUM OPINION AND JUDGMENT[*]

I. Introduction

Three sisters disputed various aspects of their parents’ probate proceedings, including the disposition of their parents’ stock in regional and village corporations.[1] The sisters entered into a settlement agreement in the probate proceedings resolving all pending disputes, including the dispute about their parents’ stock, but one sister — appointed personal representative of the probate estates under the settlement agreement — later unsuccessfully attempted to set aside the settlement agreement and filed a separate lawsuit alleging conversion of the parents’ stock. The superior court concluded that the probate settlement agreement should not be set aside and separately concluded that the lawsuit should be dismissed for failure to state a claim for relief. The dissident sister appeals, but we affirm the superior court’s rulings.

II. Facts and Proceedings

A. Facts

Warren and Dorcas Neakok were Iñupiaq residents of Alaska’s North Slope and shareholders in their village and regional corporations. They had three daughters, Nancy Leavitt, Lily Anniskett, and Marie Tracey.

In 1996 Warren and Dorcas both made wills disposing of their ANCSA corporation stock in the Arctic Slope Regional Corporation (ASRC) and in Cully Corporation. In 2004 they completed testamentary disposition forms changing the distribution of their stock. Dorcas died in 2006 and Warren died in 2010.

B. Proceedings

1. Initial probate proceedings

Lily applied to be appointed personal representative of her parents’ estates. Marie did not consent to Lily’s appointment and raised several objections, including that Lily had mishandled their parents’ assets. Marie also asserted that she had been given ASRC and Cully Corporation shares by her parents before their respective deaths, and the stock was therefore not included in the estates.

The sisters reached an agreement on the record at a hearing a year later. Lily and Nancy agreed that the corporation shares were “taken care of outside th[e] probate matter” and to let each corporation decide how its stocks would be distributed. Marie would receive the ASRC shares from Dorcas and Marie’s lawyer explained that Cully Corporation had informed her it would “honor whatever ASRC did with regards to stock transfers” and transfer stock to Marie. All of the sisters also agreed that Lily would be the personal representative. Marie’s lawyer asked that Lily “affirm on the record . . . that she’s comfortable with this agreement,” which she did.

Later that year, in November 2012, Marie filed a letter with the court from American General Life Company. In the letter the insurance company requested reimbursement for $114,000 for an annuity it had continued to pay to Dorcas for five years after her death.

At a hearing in July 2013, Marie’s lawyer asked the court to sign the order she had lodged the previous October memorializing the sisters’ agreement from the March 2012 hearing. Both lawyers assured the court that the agreement was accurate, but Lily interjected to ask about “the 150 shares [she was] supposed to get from [her] parents in this order.” She asserted that she did not understand “what we’re trying to do” and questioned whether “they [were] trying to take all of our shares from Cully Corporation and ASRC from my mom and dad.”

After the court read the agreement into the record, Lily asked again about the ASRC shares because “the will . . . says all three of us get the ASRC shares.” Marie’s lawyer clarified that because Dorcas and Warren had “deeded the shares over to [Marie] prior to their deaths . . . their deeding . . . took precedence over the will.” Marie confirmed that she had received the ASRC shares but not her father’s Cully Corporation shares.

The court explained that it was “being asked simply to sign off on . . . what the family agreed to back in March of 2012.” Lily, who was participating by telephone, told the court that although she was “very disappointed of what [was] happening . . . [she was] willing to sign [the agreement].” She reiterated that she was going to “go ahead and sign it and have [Marie] live happily ever after” and hung up. The court signed the order accepting the agreement nunc pro tunc to October 15, 2012 to enable the personal representative to address the “development of a creditor’s claim.”

Marie later filed a notice disclaiming the funds in her parents’ bank accounts because of the creditor’s demand by American General Life Company.

2. Motion to compel stock transfer and amended agreement

In May 2014 Marie filed a motion to compel the transfer of the Cully Corporation stocks. Cully Corporation entered a limited appearance disputing the court’s jurisdiction to enforce the agreement and contesting the validity of the 2004 stock wills. After several hearings the parties revised their settlement agreement to recognize Cully Corporation’s authority to direct the distribution of its stock and to authorize it to distribute the shares equally between the sisters according to the 1996 wills. In January 2015, the court signed an amended order incorporating the revised agreement, ordering Lily to give her Cully Corporation shares to Marie, and providing that Lily would continue to serve as personal representative.

3. Motion to set aside global resolution

In April 2018 — more than three years after the agreement was amended — Lily filed a motion based upon Alaska Civil Rule 60(b) to set aside the global resolution. Lily claimed that Marie and her lawyer Alicia Porter “pressured,” “badger[ed,] and threaten[ed]” her to convey her ASRC stock to Marie and that Porter had wrongfully asserted that Marie had an interest in assets she had earlier disclaimed. Lily also claimed that she had been “ineffectively represented, [or] not represented at all” by her previous lawyers. Lily argued that the ASRC stock had never been part of any agreement and that she had conveyed the Cully Corporation stock based on an invalid stock will produced by undue influence.

Lily asserted that the court should set aside the global resolution under Rule 60(b)(5) and (6)[2] because of “extraordinary circumstances of oppressive conduct coupled with fraud by opposing counsel along with gross negligence of the attorneys who had previously represented [her].” She attached an affidavit detailing why she believed neither of her previous lawyers had provided her with adequate representation. And she asserted that she had been “in very bad physical condition.”

Marie opposed Lily’s motion. She argued that the sisters had settled in order to avoid trial on other issues including Lily’s actions as Warren’s guardian after Dorcas’s death, and that opening the case would expose Lily to liability for wasting Warren’s resources and for elder abuse. And she pointed out that if Lily was dissatisfied with her lawyers’ representation, the appropriate remedy would be a malpractice action. Marie argued that Lily had voluntarily agreed to settle all these matters and could not undo the agreement because “she now dislikes her attorney’s recommendations.”

Marie also argued that the motion was untimely.[3] She argued that Lily’s current lawyer had been involved for two years and that his delay in filing the motion to set aside the agreement would prejudice Marie. Marie then advised the court that because she was “tired of continuing to battle,” Lily could “keep her Cully Corporation shares” which she noted the Cully Corporation board had never transferred to Marie.

Lily replied, reiterating her previous claims and argued for the first time that the court had a “duty to protect” the interests of her children, who “object strongly to the conversion of the ASRC stocks.” She argued that the lack of notice to them about the stock conveyance violated her children’s due process rights.[4]

On May 25 Marie conveyed 50 ASRC shares back to Lily.

At a July evidentiary hearing on the motion to set aside the agreement Lily reiterated the arguments she made in her motions. Her lawyer called Marie as a witness and asked whether the reason she reconveyed ASRC shares to Lily was “because [she] knew those stocks didn’t come under any of [their] agreements.” Porter objected that Lily’s lawyer was “functionally asking [Marie] to admit fraud” and the court sustained her objection on Fifth Amendment grounds. After additional testimony the court ended the hearing.

After the court requested additional briefing on Lily’s motion to set aside, Marie, represented by new counsel, filed a brief arguing that the Rule 60(b) motion was untimely, and that even if it were timely it should be dismissed because it would be “an inappropriate remedy for [Lily’s] imagined problems with the global resolution.” Marie argued that Rule 60(b)(1) or (3) required any motion to be brought within one year of the judgment or order at issue; the original settlement in 2012 and its amendment in 2013 were years earlier. And she argued that a motion brought under subsection (b)(5) was “limited to final judgments and thus does not encompass interim orders, such as the Order for Global Resolution of Case.[5]

Lily argued that the court should set aside the settlement because res judicata was “merely a rule of discretionary authority . . . that should never be a bar in cases involving a settlement in which a party was ineffectively represented.” She claimed that Porter pressured her to convey stock with “specious threats about suing over a false claim of undue influence” and that the court had a duty to protect her children’s interests and to provide them notice because they objected to the conveyance of the ASRC stocks. And she argued that Marie had “engaged in bad faith conduct vitiating any agreement” and that the court should “order the stock to be reconveyed.” Lily also claimed without elaboration that the case “involve[d] circumstances of fraud on the court” and that she was entitled to relief from the judgment under Rule 60(b)(6).

The standing master recommended denying the motion to set aside in March 2019. The master noted that Lily’s argument that the agreement was formed by fraud was a claim under subsection (b)(3).[6] Because claims under that subsection needed to be brought within one year, the master concluded that Lily’s motion was untimely because it was brought “more than 40 months” after the amended settlement was entered. And it found that the claim did not fall under any of the other subsections. Because Lily’s motion was untimely under (b)(3) and “excluded from the scope of 60(b)(4)-(6),” the master recommended that the superior court deny the motion.

The superior court accepted the master’s recommendation and issued an order denying the motion a month later. After finding that a Rule 60(b)(3) motion was time-barred, the court recognized that an exception could be made to set aside a judgment under subsection (b)(6) if there had been fraud upon the court. But the court found that neither Porter’s alleged threats to sue nor Lily’s lawyer’s alleged failure to properly counsel Lily amounted to “fraud in the inducement of the settlement agreement.”

Lily filed a motion for reconsideration. She argued that the court overlooked evidence from the evidentiary hearing in June, which she claimed violated her right to a meaningful hearing. And she alleged that Marie committed fraud and acted in bad faith and that the stock wills were improperly notarized by Marie’s husband. She also argued that the court had unfairly ended the evidentiary hearing on the motion to set aside and that it should have recognized that her son was an interested party. The court denied Lily’s motion for reconsideration in May 2019, finding that Lily had “not raised new relevant issues of law or fact for the court to consider.”

C. Collateral Civil Complaint

After the July evidentiary hearing, Lily and her son Michael filed a civil complaint against Porter; Marie’s husband, William Tracey; and Marie based on their conduct in the probate case. The complaint, filed in September 2018, alleged that Porter had “extorted, coerced and threatened” Lily with “bad faith civil litigation” unless she conveyed Warren and Dorcas’ ASRC and Cully Corporation stock to Marie. It claimed that Lily had been forced to “endure prolonged litigation” with delays, additional transportation and lodging costs, and additional attorney’s fees.

Based on the allegations in the complaint, Lily and Michael asserted that the Traceys and Porter had committed conversion of the stocks and that they were entitled to damages in excess of $10,000. They later amended the complaint to add Lily’s former lawyer Jon Buchholdt as a defendant[7] and to include a second count alleging that the Traceys’ and Porter’s actions breached the covenant of good faith and fair dealing.

Porter argued in her answer that the complaint failed to state a cause of action upon which relief could be granted and followed up with a motion to dismiss the case. She argued that the claims in the complaint were an improper attempt to circumvent an ongoing probate case and not legally cognizable. Porter also argued that because she had no contract with Michael and Lily, they had no claim for breach of the implied covenant of good faith and fair dealing, as Alaska law does not recognize any generalized duty to avoid acting in bad faith outside of a contract. Porter also argued that the plaintiffs had not alleged facts that would amount to conversion. And finally she asserted that the superior court did not have subject matter jurisdiction because the claims were based on actions in the probate case.

In their opposition to the motion to dismiss, Lily and Michael argued that the probate court lacked jurisdiction to address the ANCSA corporation stock. They rehashed many of the arguments from Lily’s motion to set aside the global agreement, and asserted that Porter had worked in concert with Marie and her husband to perpetuate a fraudulent conversion of the stock and that Buchholdt was either complicit or had been negligent in his representation of Lily. Porter reiterated her position in reply.

The court granted the motion to dismiss. It found that the complaint had failed to allege any facts about “any conduct by Porter relevant to a tort of conversion” and that the only allegation against Marie’s husband was “that he notarized a stock will, which he admits.” And it found that the complaint had not pled any nonconclusory facts that would support a claim of conversion against Marie. The court dismissed the case with prejudice.

The court entered final judgment and granted the Traceys’ and Porter’s motions for attorney’s fees. It found that the Traceys and Porter were the prevailing parties and were therefore entitled to attorney’s fees under Civil Rule 82.[8] But the court rejected their argument that they were entitled to full fees because it was “not persuaded that the collateral attack was done with vexation or in bad faith.”

Lily and Michael appeal the dismissal of their lawsuit. And Lily appeals the denial of her motion to set aside the global settlement in the probate case.

III. Standard of Review

“We review orders denying Rule 60(b)(6) relief under the abuse of discretion standard.”[9]

We review the superior court’s grant of a motion to dismiss pursuant to Rule 12(b)(6) de novo, “construing the dismissed complaint liberally, and assuming the truth of the facts it alleges.”[10] We view dismissals under Rule 12(b)(6) “with disfavor.”[11] Dismissals under Rule 12(b)(6) “should only be granted on the rare occasion where ‘it appears beyond doubt that the plaintiff can prove no set of facts in support of the claims that would entitle the plaintiff to relief.'”[12]

IV. Discussion

A. The Superior Court Did Not Abuse Its Discretion By Denying Lily’s Motion To Set Aside The Global Agreement.

Lily argues that the superior court should have set aside the global agreement under Civil Rule 60(b)(5)-(6). She claims that Dorcas’s Cully Corporation stock will was “facially fraudulent” and had been found to be fraudulent by the Cully Corporation. Lily argues that the court should have inquired about whether she had knowingly entered into the global agreement with the advice of counsel, because she gave “a confused and ambivalent statement” when the judge asked if she agreed. And she accuses Porter of “deceptive conduct, and trickery, and oppression” for allegedly failing to deliver a letter to a bank holding some of the estates’ assets.[13] Based on these allegations, Lily argues that the stock was obtained improperly and that the global resolution should be set aside under Alaska Rule of Civil Procedure 60(b)(5) and (6).

Rule 60(b) has six numbered subsections.[14] Although Lily nominally brings her claims under subsections (5) and (6),[15] she alleges that she was induced to sign the agreement by fraud. Therefore, her claims would arise under subsection (3), which provides for relief from judgment in the case of fraud, misrepresentation, or other misconduct.[16] Motions under Rule 60(b) “shall be made within a reasonable time, and for reasons (1), (2) and (3) not more than one year after the date of notice of the judgment or orders.”[17] Thus, a request for relief from judgment for fraud or misrepresentation must be brought within a year.

The amended order in this case was entered on January 14, 2015, dated nunc pro tunc to November 25, 2014. The motion to set aside the global resolution was filed on April 17, 2018. Even using the date the order was actually signed, Lily filed her set-aside motion more than three years after the order. The motion is therefore time-barred under Rule 60(b)(3). And although Lily also relies on the catch-all provision of subsection (6), “[a] party may only obtain Rule 60(b)(6) relief if no other Rule 60(b) clause applies.”[18] Lily’s argument that the agreement was induced by fraud could have been brought under subsection (3) within one year. Because it was not, the motion was time-barred and the superior court did not abuse its discretion by denying it.

Lily’s argument that her then-lawyer’s failure to provide adequate assistance justifies setting aside the agreement is similarly unavailing. “Relief under 60(b)(6) is inappropriate when a party takes a deliberate action they later regret as a mistake.”[19] Lily stated on the record that she had already told her lawyer that she was “in agreement.” The court then asked her to affirm that she agreed, and she did. Lily argues that at a previous hearing her lawyer “permitted Porter to deal directly with” her regarding transferring the Cully Corporation shares. But she does not explain how this affected the final agreement. And if her lawyer did fail to provide adequate representation, “the client’s appropriate remedy is an action for malpractice.”[20] The court did not abuse its discretion by denying Lily’s motion to set aside the agreement based on her lawyer’s conduct.[21]

B. The Superior Court Did Not Violate Michael’s Due Process Rights.

Lily claims that the court erred by failing to provide Michael notice of the probate proceedings. But Michael is not a party to the probate appeal.[22] “[G]enerally, a litigant lacks standing to assert the constitutional rights of another” unless the litigant can assert third-party standing.[23] Lily did not assert and does not appear to have third-party standing for Michael. Although this court has held that “[p]arents . . . may assert the rights of their minor children,”[24] Michael is not a minor.[25] Because Michael is not a party to this case and Lily does not have third-party standing to raise claims on his behalf, we need not consider whether the superior court violated Michael’s due process rights.

C. The Superior Court Did Not Violate Lily’s [*18]  Due Process Rights By Terminating The July Evidentiary Hearing.

Lily argues that “[t]he trial court’s refusal to allow [her] to be fully heard, and to make fully informed examination of [Marie and Porter] . . . violated [her] right to a meaningful hearing.” Although a court generally must hold an evidentiary hearing on a Rule 60(b) motion if there are facts in dispute, failure to hold a hearing requires reversal only if the party that requested a hearing demonstrates prejudice.[26] Lily’s brief does not describe how her rights were violated, but her motion for reconsideration alleged that Marie was “teetering on the admission of fraud” when the evidentiary portion of the hearing ended. As Marie notes, “it is unclear how any such facts could be relevant to the court’s determination [of the 60(b) motion], given Lily’s failure to bring such motion in a timely period.” Because any motion for relief from judgment under Rule 60(b) based on fraud would have been untimely, ending the hearing did not prejudice Lily and therefore did not violate her due process rights.[27]

D. The Court Did Not Err By Exercising Subject Matter Jurisdiction Over The Agreement.

Lily argues that “the trial court erred when it exercised subject matter [jurisdiction] because the case did not involve intestate succession and section 705 acknowledges ANCSA corporations’ exclusive jurisdiction for probate of the stocks.” Lily is correct that stock in ANCSA corporations does not pass through probate.[28] But superior courts do have jurisdiction if there is a dispute over who is entitled to inherit the stock.[29] And in this case, the probate court was not exercising jurisdiction over the transfer of stock; it was ratifying the agreement reached by Dorcas and Warren’s daughters that Lily would transfer stock to Marie, and Marie would agree to Lily’s appointment as personal representative.

E. The Superior Court Did Not Err By Dismissing Lily And Michael’s Collateral Suit.

Lily and Michael argue that the superior court’s dismissal was in error because they “pled facts specific to the conversion of the [N]ative corporation stocks, fraudulent inducement, and violation of the covenant of good faith and fair dealing . . . includ[ing] coercive pressure combined with a nonsensical elder fraud threat that induced [Lily] to capitulate to Porter and Marie Tracey’s demands.”[30] We view dismissals for failure to state a claim under Civil Rule 12(b)(6) “with disfavor,”[31] directing that they

"should only be granted on the rare occasion where it appears beyond doubt that the plaintiff can prove no set of facts in support of the claims that would entitle the plaintiff to relief." In other words, "the complaint need only allege a set of facts consistent with and appropriate to some enforceable cause of action."[32]

Even under this lenient pleading standard, Lily and Michael failed to allege facts sufficient to support a claim against Marie or Porter for conversion or breach of the covenant of good faith and fair dealing. In addition, Lily and Michael's claim against Marie fails because of claim preclusion.

1. The conversion claim did not sufficiently allege the required element of fraud or duress.

In their complaint to the superior court, Lily and Michael alleged that Marie obtained shares that rightfully belonged to Lily through “trickery, fraud, forgery, undue influence and criminal misuse of . . . [a] notary.” These allegations could begin to state a claim for conversion.[33] But Lily had already argued that the settlement agreement should be set aside based on allegedly fraudulent notarization of wills in the probate matter, so a claim for conversion against the Traceys based on that allegation is barred by claim preclusion.[34]

Claim preclusion “provides that a final judgment in a prior action bars a subsequent action if the prior judgment was (1) a final judgment on the merits, (2) from a court of competent jurisdiction, [and] (3) in a dispute between the same parties (or their privies) about the same cause of action.”[35] Lily and Michael’s complaint alleged that William Tracey “executed the notary for Dorcas Neakok’s and Warren Neakok’s signature[s] on their respective stock wills” one year after Dorcas and Warren had signed the documents. Their claim that allegedly fraudulent conduct induced the settlement agreement requiring the transfer of shares from Lily to Marie is the same both in their motion to set aside the settlement in the probate matter and in the conversion suit. Lily was a party to the original lawsuit and brought the complaint against Marie Tracey. The issue was resolved by a final judgment on the merits in the probate case when the superior court denied Lily’s motion to set aside the agreement. Therefore, Lily is precluded from relitigating the issue.

Porter, as Marie Tracey’s attorney, was neither party to the previous suit nor was she in privity with the Traceys. Privity serves to ensure that a “non-party has had adequate notice and opportunity to be heard” to protect his or her rights and interests in prior litigation.[36] Privity exists where “the non-party (1) substantially participated in the control of a party’s presentation in the adjudication or had an opportunity to do so; (2) agreed to be bound by the adjudication between the parties; or (3) was represented by a party in a capacity such as trustee, agent, or executor.”[37] None of these criteria applied to Porter, so the claim against her cannot be barred by claim preclusion.

However, Lily and Michael failed to allege non-conclusory facts to make a prima facie case for conversion against Porter under Rule 12(b)(6). They did not provide any specific allegations of fraud or duress to support their claim.[38] We therefore affirm the superior court’s dismissal of the conversion claim against Porter. And because Lily and Michael’s complaint similarly contained no specific allegations of fraud or duress besides the claim-precluded notarization allegation, we affirm the dismissal of the conversion claim against the Traceys.

Alaska law requires that

[t]o establish a claim for conversion, the plaintiff must prove (1) that she had a possessory interest in the property; (2) that the defendant interfered with the plaintiff's right to possess the property; (3) that the defendant intended to interfere with plaintiff's possession; and (4) that the defendant's act was the legal cause of the plaintiff's loss of the property.[39]

The Restatement (Second) of Torts § 221 explains that the intentional dispossession may be committed by "obtaining possession of a chattel from another by fraud or duress."[40] Comment d to § 221 further explains that "fraudulent representations [which] induce[] another to surrender the possession of a chattel" can also constitute dispossession.[41]

Civil Rule 9(b) requires that an allegation of fraud be pled with particularity. This particularity standard “is not high”[42] and merely “requires a claim of fraud to specify the time and place where the fraud occurred.”[43] But there must be something more than “recit[ing] without specificity that fraud existed.”[44] Lily and Michael’s complaint alleged only that Porter “extorted, coerced and threatened” Lily “with threats of bad faith civil litigation” in November 2014. There were no allegations of misrepresentations of fact or law which could constitute fraud.

Lily and Michael’s complaint against Porter could be interpreted to allege that the settlement agreement was induced by duress. “[D]uress generally requires a threat that arouses such a fear as to preclude a party from exercising free will and judgment . . . .”[45] Lily and Michael alleged that Porter “extorted, coerced, and threatened [Lily] with threats of bad faith civil litigation.” But the mere threat of a lawsuit is insufficient. We have not previously ruled on this issue, but the rulings of courts in other jurisdictions provide persuasive guidance.[46] A party’s statement of intent to file a lawsuit, even if such a suit lacks merit, does not constitute duress unless accompanied by conduct which itself would be illegal or an abuse of the judicial process.[47] Because Lily and Michael’s conversion claim against Porter failed to allege any nonconclusory facts that could support an action for conversion or duress, we affirm the superior court’s dismissal under Rule 12(b)(6) for failure to state a claim.[48]

Likewise, other than the claim-precluded allegation of fraudulent notarization, Lily and Michael’s conversion complaint against the Traceys did not describe with particularity acts that could amount to a claim for fraud. The complaint contained the nebulous claim that “from July 2016 until approximately March of 2018, Defendants acted in concert to further the conversion of funds that had been disclaimed by Defendant Marie Tracey in August of 2013,” but it failed to describe what actions were taken. The complaint also included the allegation that Marie lied under oath in a 2018 evidentiary hearing, but did not explain how her “‘material’ false statements” relate to a conversion which would have occurred over ten years earlier. Lily and Michael argue in their brief that the Traceys “include[d] a bad faith claim on . . . previously disclaimed funds and elder fraud litigation,” which could be interpreted as an allegation of fraud (in the sense of misrepresentation) or of duress. However, these unspecific allegations do not meet the requirements of Rule 9(b) to plead fraud, and threats of litigation without more do not constitute duress.

2. The complaint does not sufficiently allege a breach of the covenant of good faith and fair dealing to survive dismissal.

The superior court found that Lily and Michael did not sufficiently plead their claim that the Traceys and Porter had breached the covenant of good faith and fair dealing, and that it could not therefore address the claim. The amended complaint states only that “[d]efendants’ conduct constituted a breach of the covenant of good faith and fair dealing.” While it is true that “[t]he covenant of good faith and fair dealing is implied in every contract in order to effectuate the reasonable expectations of the parties to the agreement,”[49] the superior court is correct in pointing out that the covenant can “only be enforced against parties to the contract at issue.” Because Porter was not a party to the settlement agreement, the covenant does not apply to her.

The complaint also does not support an allegation that Marie and William Tracey breached the implied covenant of good faith and fair dealing. The purpose of the covenant is to “effectuate the reasonable expectations of the parties to the agreement.”[50] The conduct alleged in the complaint related to the formation of the agreement, not to effectuating the agreement once it was created. And as the superior court noted, the complaint contained no allegations that Marie and William failed to live up to their contractual obligations. The superior court did not err by dismissing the covenant of good faith and fair dealing claim.

3. The court did not violate Lily and Michael’s due process rights.

Lily and Michael argue that not allowing the case to proceed to a jury trial violated their state and federal due process rights. But a party’s due process rights are not violated as long as the court complies with the requirements of Civil Rule 12(b)(6).[51] The superior court analyzed Lily and Michael’s claims and found that the complaint “fail[ed] to allege even a single set of facts consistent with and appropriate to some enforceable cause of action.” The superior court provided Lily and Michael the process they were due by following Rule 12(b)(6) and concluding that their complaint failed to state a claim.[52]

F. The Court Did Not Err By Awarding The Traceys And Porter Attorney’s Fees In The Conversion Suit.

Lily and Michael argue that the court erred by awarding attorney’s fees because Marie’s fees were higher than they should have been because of her conduct during the probate litigation. Marie’s conduct during the probate litigation is irrelevant to the conversion suit. And as Porter and the Traceys both argue, Lily and Michael failed to appeal either the superior court’s prevailing party determination or its finding that the fees were reasonable, which are the two relevant variables under Civil Rule 82.[53] Therefore, there is no basis to conclude that the superior court abused its discretion by awarding attorney’s fees under Rule 82.

V. Conclusion

The superior court’s denial of Lily’s motion to set aside the settlement, its dismissal of Lily and Michael’s conversion complaint, and its award of attorney’s fees for the conversion suit are AFFIRMED.

Order RE Motion to Dismiss First Amended Complaint and Motion to Determine Rule of Law

Before the Court at Docket 36 is Kake Tribal Corporation, Jeffrey W. Hills, and Robert D. Mills’s (collectively, “Defendants”) Motion to Dismiss Plaintiff’s First Amended Complaint. Plaintiff Peter Adams, Sr. did not file a response. Also before the court at Docket 37 is Plaintiff’s Motion to Determine Rule of Law in the Case, which addresses many of the same topics raised in Defendants’ motion to dismiss. Defendants responded in opposition at Docket 39, to which Plaintiff replied at Docket 40. Given the overlap, the Court will treat Plaintiff’s motion and reply as an opposition to Defendants’ motion to dismiss. Oral argument was not requested for either motion and was not necessary to the Court’s decision.

Factual & Legal Background

The factual allegations and legal background of this case are set forth in detail in the Court’s June 30, 2021 order at Docket 22 (“June 30 Order”). In short, Plaintiff, a shareholder of Kake Tribal Corporation (“KTC”), alleges that Defendants violated Section 7 of the Alaska Native Claims Settlement Act (“ANCSA” or “the Act”) and the Alaska Corporations Code by failing to conduct and timely disclose financial audits, not holding annual shareholders meetings, failing to distribute dividends, and violating other fiduciary rights and privileges of KTC shareholders, among other claims.

In the June 30 Order, the Court dismissed without prejudice Plaintiff’s original complaint but granted leave to file an amended complaint consistent with terms of the Court’s order.[1] Plaintiff filed an Amended Complaint for Corporate Governance (“First Amended Complaint” or “FAC”) on August 26, 2021, adding an additional claim under the Small Business Act regulations.[2] The Court now considers Defendants’ motion to dismiss the

Legal Standards

The Court’s June 30 Order sets forth the legal standard for motions to dismiss.[3]

Discussion

I. ANCSA Claims

Plaintiff’s FAC asserts that Defendants violated several provisions of ANCSA. With respect to Plaintiff’s ANCSA claims, the FAC contains limited new factual allegations that largely mirror those in the original complaint and are discussed below. Defendants assert that the FAC still fails to state viable ANCSA claims in federal court.[4]

A. Subsection 7(h)(1)(A)

As with the original complaint, Plaintiff’s FAC alleges violations of three provisions of ANCSA subsection 7(h)(1)(A), each of which is addressed in turn.

i. Subsection 7(h)(1)(A)(i)

Subsection 7(h)(1)(A)(i) provides that “Settlement Common Stock of a [Village] Corporation shall . . . carry a right to vote in elections for the board of directors and on such other questions as properly may be presented to shareholders.”[5]

In the June 30 Order, the Court held that Plaintiff failed to state a claim under ANCSA subsection 7(h)(1)(A)(i) because the complaint neither alleged that “the common stock issued by KTC does not confer the right to stockholders to vote in corporate elections” nor that Plaintiff “has been denied the right to vote in any KTC election.”[6]

Plaintiff’s FAC alleges that in 2021 and in other years KTC “has not conducted an annual meeting within a reasonable time after the distribution of the annual financial report, the consequence of which is to impair [his] voting rights by preventing [him] from knowing the current state of the corporation’s financial affairs and health at the very time when [he] need[s] this information to cast an informed vote.”[7] Plaintiff also realleges that, in some years, “KTC did not conduct an annual meeting within the time allowed by its corporate bylaws,” thereby denying him his right to vote in corporate elections.[8]

While Plaintiff’s FAC contains new factual allegations, specifically with regard to the alleged failure to hold an annual meeting “within a reasonable time” in 2021, the FAC still does not allege that KTC shares do not confer a right to vote in elections. Additionally, Plaintiff’s FAC does not state a viable claim under subsection 7(h)(1)(A)(i) on the basis that he was denied a “meaningful, informed” vote simply because annual shareholding meetings were not held at his preferred time; this subsection does not impose any requirement on KTC for when or if annual shareholder meetings must be held in relation to the release of financial reports. Similarly, Plaintiff cannot state a viable claim under this subsection alleging that he was denied a right to vote when no annual meetings were held because the statute only provides the right to vote when elections are held.

Accordingly, Plaintiff’s FAC fails to state a claim that Defendants violated ANCSA subsection 7(h)(1)(A)(i).

ii. Subsection 7(h)(1)(A)(ii)

Subsection 7(h)(1)(A)(ii) provides that “Settlement Common Stock of a [Village] Corporation shall. . . permit the holder to receive dividends or other distributions from the corporation.”[9]

In the June 30 Order, the Court found that Plaintiff failed to state a claim under this subsection because the original complaint did “not allege that his shares of common stock do not entitle him to receive dividends or other distributions.”[10] The Court also found that Plaintiff’s claim that “he is entitled to receive dividends that have not been distributed by KTC in recent years” was unfounded because “subsection 7(h)(1)(A)(ii) only requires that common stock carry the right to a dividend when distributed.”[11]

Plaintiff’s FAC still does not allege that his shares of common stock do not entitle him to receive dividends or other distributions. Rather, the FAC merely again states Plaintiff’s claims that he is not receiving regular dividends that he is allegedly entitled to because KTC officers and directors are purportedly looting the company.[12] But, as discussed previously, subsection 7(h)(1)(A)(ii) “plainly does not confer the right, as Plaintiff appears to allege, on a shareholder to automatically or routinely receive dividends.”[13]

Accordingly, for the reasons discussed in the June 30 Order, Plaintiff’s FAC fails to state a claim that Defendants violated subsection 7(h)(1)(A)(ii).

iii. Subsection 7(h)(1)(A)(iii)

Subsection 7(h)(1)(A)(iii) provides that “Settlement Common Stock of a [Village] Corporation shall . . . vest in the holder all rights of a shareholder in a business corporation organized under the laws of the State [of Alaska].”[14] Plaintiff appears to allege both a direct violation of subsection 7(h)(1)(A)(iii) and various violations of the Alaska Corporations Code as allegedly embedded into that federal provision.

1. Direct Violation of Subsection 7(h)(1)(A)(iii)

In the June 30 Order, the Court found that Plaintiff’s original complaint failed to state a claim for a direct violation of subsection 7(h)(1)(A)(iii) because it did “not allege that his shares of KTC common stock do not confer upon him the same rights that the stock in an Alaska business corporation confers upon its stockholders under Alaska law.”[15]

Plaintiff’s FAC still suffers from this same defect. Accordingly, for the reasons in the June 30 Order, to the extent that Plaintiff is alleging that KTC directly violated this subsection by issuing common stock that does not confer upon him the same rights conferred upon Alaskan corporation shareholders, the FAC fails to state a claim that Defendants violated subsection 7(h)(1)(A)(iii).

2. State Violations as Embedded [*7] into Subsection 7(h)(1)(A)(iii)

Plaintiff also appears to assert that the reference in subsection 7(h)(1)(A)(iii) to “the laws of the State” confers upon him the right to assert violations of Alaska corporate law in federal court against Defendants.

In the June 30 Order, relying on Cook Inlet Region, Inc. v. Rude, the Court found that “where . . . ‘state law is embedded in a federal-law claim,’ this Court has jurisdiction to hear” such claims in federal court.[16] Nonetheless, the Court found that Plaintiff’s “complaint fail[ed] to adequately plead violations of the Alaska Corporations Code.”[17]

Asserting that Rude is distinguishable, Defendants now ask the Court to reconsider the June 30 holding that ANCSA subsection 7(h)(1)(A)(iii) incorporates the Alaska Corporations Code and thereby confers federal question jurisdiction on this Court to hear Plaintiff’s claims of alleged violations of that code, despite a lack of diversity jurisdiction.[18]

Rude involved a suit by Cook Inlet Region, Inc. (“CIRI”), an ANCSA corporation, against certain of its shareholders who had distributed petitions seeking to lift ANCSA’s alienability restrictions on the sale of ANCSA stock. The corporation alleged that the shareholders had violated a provision of ANCSA that expressly incorporates state law by providing that the solicitation of signatures for ANCSA shareholder petitions is governed by a provision of Alaska law prohibiting false and misleading statements in proxy solicitations.[19]

The shareholders asserted that there was no federal question jurisdiction over CIRI’s claim. The Ninth Circuit disagreed, reasoning that CIRI had brought the claim under a provision of ANCSA that incorporated state law by expressly providing that the state law regarding proxy solicitations would apply to ANCSA shareholder petitions. It further reasoned that the plaintiff “could not have brought [the] claim directly under Alaska law because the relevant provision of Alaska law governs proxy solicitations rather than shareholder petitions.”[20]

Here, unlike ANCSA’s alienability restriction provision, subsection 7(h)(1)(A)(iii) does not expressly incorporate a specific state law to apply to an issue unique to ANCSA stock. Additionally, unlike Rude, Plaintiff is asserting garden-variety state law claims and does not contend that he cannot bring those claims in state court. As such, Rude is distinguishable.

The Supreme Court has “consistently emphasized that, in exploring the outer reaches of [federal question jurisdiction], determinations about federal jurisdiction require sensitive judgments about congressional intent, judicial power, and the federal system.”[21] Restraint in the exercise of the Court’s jurisdiction is particularly warranted when the dispute concerns the relation between a tribe and its members.[22] Under Plaintiff’s apparent interpretation, ANCSA subsection 7(h)(1)(A)(iii) would permit a federal court to hear any Alaska Corporations Code claim involving ANCSA stock. The Court does not discern such a broad congressional intent here and, in fact, most indications are to the contrary.[23] Accordingly, the Court finds that subsection 7(h)(1)(A)(iii) does not provide federal subject matter jurisdiction over Alaska Corporations Code claims involving ANCSA stock.

Even assuming that the Court does have jurisdiction of the state law claims pursuant to subsection 7(h)(1)(A)(iii), Plaintiff’s FAC does not substantively address any of the deficiencies the Court identified in the June 30 Order.[24] Accordingly, for the reasons stated in the June 30 Order, Plaintiff’s FAC fails to state a claim that Defendants violated various provisions of the Alaska Corporations Code.[25]

B. Subsection 7(o)

Subsection 7(o) generally provides that the accounts of a village corporation shall be audited annually by independent accountants, and that the audit report, or a fair and reasonably detailed summary, shall be transmitted to each stockholder of the corporation.[26]

In the June 30 Order, the Court dismissed Plaintiff’s subsection 7(o) claim because the complaint did “not allege which years KTC purportedly failed to conduct an audit.”[27]

Plaintiff’s FAC again does not allege which years KTC failed to conduct an audit. In fact, Plaintiff admits that he cannot identify which years KTC did not audit its finances.[28] Moreover, Plaintiff has provided the Court with audited financial reports for 2017, 2018, 2019, and 2020, and a newsletter indicating that audits prior to those years have been completed.[29] Accordingly, Plaintiff’s FAC fails to state a claim that Defendants violated subsection 7(o).

C. Plaintiff’s Corporate Looting Claims

In addition to the specific pleading deficiencies of Plaintiff’s FAC with respect to both federal and state law discussed above, the Court also finds the gravamen of Plaintiff’s FAC patently without merit.

Substantially similar to his original complaint, Plaintiff’s FAC alleges that KTC directors and officers are looting the company by directing profits to themselves in the form of an unofficial “dividend,” all at the expense of regular shareholders. In particular, Plaintiff alleges that

KTC has created an illegal preferred stock that is owned only by a small privileged group of insiders, officers, directors, and their family members — to whom KTC pays dividends that disguised as salaries, directors’ fees, and other forms of preference and privilege. These extra distributions are paid by stealth and violate the right of equal treatment of shares in matters of dividends and distributions.[30]

Plaintiff contends this “illegal preferred stock” violates the Equal Treatment Rule.[31]

In attempted support of this accusation, Plaintiff almost exclusively relies on the fact that KTC has not paid a dividend to its shareholders in more than twenty years. But Plaintiff’s lawyer, Fred Triem, has been involved in litigation against KTC for decades and does not dispute that the Alaska State Superior Court issued an order in the Hanson v. Kake Tribal Corp., 939 P.2d 1320 (Alaska 1997), class litigation that has restricted KTC’s ability to pay dividends since 1999.[32] Moreover, Plaintiff does not plausibly allege facts that, if proven, could establish that the salaries and fees paid to KTC officers and directors constitute “illegal preferred stock” under Alaska law.[33] Because Plaintiff’s FAC does not state “enough fact to raise a reasonable expectation that discovery will reveal evidence of” any impropriety,[34] the FAC fails to state a claim.

For the foregoing reasons, Plaintiff’s FAC fails to state a claim under ANCSA or any state law corporate governance provision that might be embedded in ANCSA.[35]

II. Small Business Act Claims

Plaintiff’s FAC also alleges that Defendants have violated the Small Business Act (“SBA”), 15 U.S.C. § 631 et seq. According to Plaintiff, KTC, as an SBA program participant, “is required to share to the financial rewards with all of its shareholders and it cannot focus these benefits on sub-groups of shareholders or upon insiders.”[36]

The Ninth Circuit has held, however, that the SBA does not provide a private right of action in similar contexts.[37] Other circuit courts have held the same.[38] Additionally, Plaintiff does not even attempt to argue that Congress intended to create a private right of action under the SBA to force an Alaska Native Corporation to pay regular dividends.[39] And Plaintiff does not identify with any specificity the statute or regulation KTC has allegedly violated. Plaintiff only cites to the SBA statutes at large and the cited regulatory provisions have no relevance to the allegations in Plaintiff’s FAC.[40] Accordingly, Plaintiff’s FAC fails to state a plausible claim under the Small Business Act and its regulations.

III. Leave to Amend

The remaining issue is whether to permit Plaintiff an additional opportunity to file an amended complaint. “The decision of whether to grant leave to amend nevertheless remains within the discretion of the district court, which may deny leave to amend due to ‘undue delay, bad faith or dilatory motive on the part of the movant, repeated failure to cure deficiencies by amendments previously allowed, undue prejudice to the opposing party by virtue of allowance of the amendment, [and] futility of amendment.'”[41] A district court’s discretion to dismiss a complaint without leave to amend is particularly broad where, as here, a plaintiff has previously been permitted leave to amend.[42] The Court addresses leave to amend with respect to each claim.

A. Subsections 7(h)(1)(A)(i), (ii)

Given that (1) KTC’s bylaws clearly establish that KTC shares carry a right to vote in elections and carry a right to dividends when distributed; (2) Plaintiff’s FAC fails to allege otherwise and does not cure the deficiency of the original complaint in this respect; and (3) subsection 7(h)(1)(A)(i) clearly does not impose any requirement on the holding or timing of elections, the Court finds that any further leave to amend with respect to claims under ANCSA subsection 7(h)(1)(A)(i) and (ii) would be futile.[43]

B. Subsection 7(h)(1)(A)(iii)

As the Court lacks federal question jurisdiction over Plaintiff’s state law claims and, in any event, Plaintiff failed to cure the deficiencies of the original complaint and state plausible state law claims,[44] the Court finds that any further leave to amend with respect to claims alleging a direct violation of, or violations of state law as incorporated into, ANCSA subsection 7(h)(1)(A)(iii) would be futile.

C. Subsection 7(o)

ANCSA contains no statute of limitations applicable to claims alleging violations of subsection 7(h)(1)(A) or 7(o). 28 U.S.C. § 1658, which provides a four-year statute of limitations for actions arising under federal statutes enacted after December 1, 1990, does not apply here because ANCSA section 7 was enacted prior to that date. Prior to the enactment of § 1658, federal courts adopted the analogous state statute of limitations for actions arising under a federal statute when the federal statute did not provide for its own statute of limitations, if it was not inconsistent with federal policy to do so.[45] The Alaska Supreme Court has held that actions against corporations and their directors are governed by the statute of limitations for actions sounding in contract, Hanson v. Kake Tribal Corp., 939 P.2d 1320, 1324-25 (Alaska 1997), and under Alaska Statute 09.10.053, the statute of limitations for an action arising out of a contract is three years. Because Plaintiff has provided the Court with audited financial reports for the past four years, the statute of limitations has run on any prior years that may have not been audited. Accordingly, the Court finds that any further leave to amend with respect to claims under ANCSA subsection 7(o) would be futile.

D. SBA

Because Plaintiff’s SBA claims are barred by Ninth Circuit precedent, the Court finds that any leave to amend those claims would be futile.[46]

Conclusion

In light of the foregoing, IT IS ORDERED that Plaintiff’s motion at Docket 37 is DENIED. IT IS FURTHER ORDERED that Defendants’ motion to dismiss at Docket 36 is GRANTED.

Plaintiff’s claims are hereby DISMISSED WITH PREJUDICE. The Clerk of the Court is directed to enter a final judgment accordingly.

Dated this 18th day of January, 2022 at Anchorage, Alaska.

/s/ Sharon L. Gleason UNITED STATES DISTRICT JUDGE