Topic: Corporate

W. Fletcher, Circuit Judge:

Plaintiff–Appellee Cook Inlet Region, Inc. (“CIRI”) is an Alaska Native Regional Corporation formed under the Alaska Native Claims Settlement Act (“ANCSA”). Defendants-Appellants Robert W. Rude and Harold F. Rudolph are shareholders of CIRI and former members of CIRI’s Board of Directors.

In 2009, Plaintiff CIRI filed suit against Defendants, alleging that they had violated ANCSA and Alaska law. The district court held that it had federal question jurisdiction over the ANCSA claims and supplemental jurisdiction over the state-law claims. On appeal, Defendants challenge the court’s holding that it had subject matter jurisdiction over the ANCSA claims. We affirm the district court.

I. Background

Congress enacted ANCSA in 1971, two years after the discovery of oil in Prudhoe Bay. Alaska Native Claims Settlement Act, Pub. Law No. 92–203, 8 Stat. 688 (1971) (codified as amended at 43 U.S.C. §§ 1601–1629h); see also Martha Hirschfield, Note, The Alaska Native Claims Settlement Act: Tribal Sovereignty and the Corporate Form, 101 Yale L.J. 1331, 1335–36 (1992) ( “Oil companies eager to exploit Alaska’s natural resources were unwilling to begin development until title to the land had been quieted.”). Under ANCSA, all Native claims to Alaskan land based on aboriginal use and occupancy were extinguished, and Native Alaskans were granted monetary compensation and title to forty million acres of land. See John F. Walsh, Note, Settling the Alaska Native Claims Settlement Act, 38 Stan. L.Rev. 227, 227 (1985).

ANCSA transferred title of the settlement land to twelve regional corporations and numerous village corporations created by the Act. 43 U.S.C. §§ 1606–07. Under ANCSA, only Native Alaskans could be shareholders in these corporations for the first twenty years of their existence. This restriction on alienation was designed to ensure that Native Alaskan lands would not be sold at low prices as soon as title cleared. § 1606(h)(1) (1982); see also Walsh, 38 Stan. L.Rev. at 232–33 (discussing reasons for alienability restriction).

In 1990 and 1991, as the twenty-year restriction neared its end, Congress amended ANCSA to broaden restrictions on the transfer of corporate stock. See Little Bighorn Battlefield National Monument, Pub.L. No. 102–201, § 301, 105 Stat. 1631, 1633 (1991); Alaska Native Claims Settlement Act, Amendment, Pub.L. No. 101–378, § 301, 104 Stat. 468, 471–72 (1990). Under current law, shareholders in regional corporations established under ANCSA cannot sell or otherwise transfer their stock except under limited circumstances. 43 U.S.C. § 1606(h)(1)(B)-(C).

Lifting ANCSA’s alienability restrictions on stock requires an amendment to the regional corporation’s articles of incorporation. See § 1629c(b). ANCSA provides two mechanisms by which these restrictions can be lifted. One of them is a shareholder vote taken at the request of a shareholder petition. § 1629c(b)(1)(B)(ii).

In 2009, Defendants solicited shareholder signatures for two petitions. The first petition sought a vote to lift the alienability restrictions. The second petition sought to convene a special shareholder meeting to consider six advisory resolutions concerning dividends, elections, financial reporting, voting rights, and compensation of senior management. The petitions suggested that Plaintiff’s board of directors and senior management were mismanaging the corporation. Defendants sent four mailers soliciting signatures for the petitions.Plaintiff filed suit, alleging two claims under ANCSA and two claims under Alaska law. Plaintiff moved for summary judgment on all claims. Defendants did not oppose the motion. The district court granted summary judgment to Plaintiff on all claims. Defendants filed a motion for relief from judgment, arguing that the court lacked federal-question subject matter jurisdiction. They also argued that the court erred in granting summary judgment on the second of Plaintiff’s two ANCSA claims. The district court concluded that it had subject matter jurisdiction. However, it changed its mind on the merits of the second of the two ANCSA claims and ruled against Plaintiff on this claim.

After entry of final judgment, Defendants appealed, challenging only the jurisdictional ruling.

II. Jurisdiction and Standard of Review

We have appellate jurisdiction under 28 U.S.C. § 1291. We review de novo district court determinations of subject matter jurisdiction. Puri v. Gonzales, 464 F.3d 1038, 1040 (9th Cir.2006).

III. Discussion

Plaintiff alleged two claims under ANCSA. The first claim alleged that defendants violated 43 U.S.C. § 1629b(c). This section permits the holders of 25 percent of the voting power of a Native corporation to petition the board of directors to lift alienability restrictions. The section provides that Alaska law governing the solicitation of proxies “shall govern solicitation of signatures for a petition,” with exceptions not applicable here. § 1629b(c)(1)(B). Plaintiff alleged that defendants’ solicitation materials for the petitions contained false and materially misleading statements, in violation of Alaska law that has been incorporated into § 1629b(c). See Alaska Stat. § 45.55.160.

The second claim alleged that defendants violated 43 U.S.C. §§ 1629b(b)(2)(A) and 1629c(b)(2). These sections require that certain information be disclosed in petitions to lift alienability restrictions. These sections do not incorporate any Alaska law.

The general federal question jurisdiction statute, 28 U.S.C. § 1331, grants federal district courts “original jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.” “A case arise[es] under federal law within the meaning of § 1331 … if a well-pleaded complaint establishes either that federal law creates the cause of action or that the plaintiff’s right to relief necessarily depends on resolution of a substantial question of federal law.” Empire Healthchoice Assurance, Inc. v. McVeigh, 547 U.S. 677, 689–90, 126 S.Ct. 2121, 165 L.Ed.2d 131 (2006) (internal quotation marks omitted). We conclude that the district court had federal-question subject matter jurisdiction over Plaintiff’s two ANCSA claims because “federal law creates the cause of action” in both claims. Id. at 690, 126 S.Ct. 2121.

Defendants make four arguments why there is no federal question jurisdiction over Plaintiff’s first claim. First, they argue that Plaintiff’s claim under § 1629b(c)(1)(B) “does not allege any serious dispute over the validity, construction or effect[ ] of the ‘federalized’ state law … that requires the experience and uniformity” of a federal forum. Second, they argue that federal question jurisdiction over the first claim would disrupt the proper federal-state balance. Third, they argue that the claim does not raise a substantial federal question. Fourth, they argue that Congress’ failure to create an explicit cause of action to challenge the solicitation of signatures indicates that it did not intend to grant federal jurisdiction over claims arising under the provision.

Defendants’ first and second arguments conflate the sometimes difficult jurisdictional question posed when federal law is embedded in a state-law claim with the much more straightforward question posed when state law is embedded in a federal-law claim. There is federal question jurisdiction over a state-law claim only if it “necessarily raise[s] a stated federal issue, actually disputed and substantial, which a federal forum may entertain without disturbing any congressionally approved balance of federal and state judicial responsibilities.” Grable & Sons Metal Prods., Inc. v. Darue Eng’g & Mfg., 545 U.S. 308, 314, 125 S.Ct. 2363, 162 L.Ed.2d 257 (2005). By contrast, there is federal question jurisdiction over a federal-law claim simply by virtue of its being a claim brought under federal law, whether or not it incorporates state law.

Plaintiff’s first claim required the district court to apply Alaska law governing proxy solicitations to determine the legality of Defendants’ shareholder petitions under ANCSA. But Plaintiff’s claim was not brought as a state-law claim. Rather, Plaintiff brought a federal-law claim under a provision of ANCSA that incorporated state law. Plaintiff did not bring, and indeed could not have brought, a claim directly under Alaska law because the relevant provision of Alaska law governs proxy solicitations rather than shareholder petitions. See Alaska Stat. § 45.55.160 (prohibiting “untrue statement[s] of material fact” in documents filed under proceedings in Chapter 55 of the Alaska Securities Act).

Defendants’ third and fourth arguments are essentially the same as their argument that there is no federal question jurisdiction over Plaintiff’s second claim. That argument is that both ANCSA claims fail on the merits, and that there is therefore no federal question jurisdiction over them.

Defendants’ argument fails because there is subject matter jurisdiction over federal-law claims unless they are “obviously frivolous.” Sea–Land Serv., Inc. v. Lozen Int’l, LLC, 285 F.3d 808, 814 (9th Cir.2002) (internal quotation marks omitted). It is hard to show frivolousness. There is federal question jurisdiction unless the federal claim is “so insubstantial, implausible, foreclosed by prior decisions of [the Supreme] Court, or otherwise completely devoid of merit as not to involve a federal controversy.” Steel Co. v. Citizens for a Better Env’t, 523 U.S. 83, 98, 118 S.Ct. 1003, 140 L.Ed.2d 210 (1998) (internal quotations omitted). “Any non-frivolous assertion of a federal claim suffices to establish federal question jurisdiction, even if that claim is later dismissed on the merits.” Cement Masons Health & Welfare Trust Fund for N. Cal. v. Stone, 197 F.3d 1003, 1008 (9th Cir.1999).

Neither of Plaintiff’s ANCSA claims was frivolous. Defendants can hardly contend that Plaintiff’s first claim was frivolous, given that the district court found Defendants liable on that claim. The district court eventually concluded that Plaintiff’s second claim failed on the merits, but that claim was not “insubstantial” or “implausible.”

Defendants make a final argument, applicable to both ANCSA claims. They contend that ANCSA itself limits federal jurisdiction over claims brought under it. Section 1601(f) states that “no provision of this chapter shall be construed to constitute a jurisdictional act, to confer jurisdiction to sue, nor grant implied consent to Natives to sue the United States or any of its officers with respect to the claims extinguished by the operation of the chapter.” 43 U.S.C. § 1601(f). Defendants have misread this section. It limits litigation challenging the elimination of Native Alaskan land claims under ANCSA, but it does not limit § 1331 federal question jurisdiction over other claims brought under ANCSA.

Conclusion

We hold that there is federal question jurisdiction under § 1331 over Plaintiff’s ANCSA claims.

AFFIRMED.

Order Granting Plaintiff's Motion for Summary Judgment As to Count I of its First Amended Complaint

Plaintiff Koniag, Inc. (“Koniag”) moves for consolidated summary judgment, arguing that statements in certain documents distributed by Frank Pagano, Charlotte Pagano, and Raymond Swensen (“Defendants”) both prior to, and during, their November 1997 proxy solicitation campaign are false and misleading statements of material fact as a matter of law. Based on the analysis below, I agree with Koniag and grant summary judgment.

I. Background

The documents which are the subject of this motion were sent by Defendants to Koniag shareholders. The documents urged Koniag shareholders, by a proxy vote, to reject a Board proposal to create a permanent trust fund for proceeds from sales of Koniag lands; and to reject the three directors nominated by the Koniag Board. At Koniag’s 1997 Annual Meeting, the permanent trust fund proposal failed, and two of the three nominees of Koniag’s Board were elected. None of the Defendants were elected to the Koniag Board.

There are three documents which are central to this motion. First, an April 1997 letter from Koniag’s former President, Frank Pagano, to Koniag shareholders. Second, Defendants’ November 1997 proxy solicitation, which sought votes for the December 1997 Koniag annual meeting. Third, a document contained in the proxy solicitation materials entitled, “What Every Shareholder Should Know,” which was distributed by Defendants at a Koniag shareholder informational meeting in Anchorage.

Koniag argues that the April 1997 letter was a proxy solicitation statement and that certain statements contained in the April letter are materially false and misleading as a matter of law. It also claims that certain statements in the November proxy solicitation are materially false and misleading as a matter of law. It additionally argues that certain statements in Defendants’ solicitation document, “What Every Shareholder Should Know” are materially false and misleading as a matter of law. Koniag finally argues that Defendants’ proxy solicitation, as a matter of law, fails to comply with Alaska securities law regarding non-board proxy solicitations.

II. Summary Judgment Standard

In order for summary judgment to be granted, the movant must show that there is no genuine issue of material fact and that it is entitled to judgment as a matter of law. Once the movant meets its burden of establishing the absence of any material facts at issue, the non-movant must produce evidence demonstrating that a material issue of fact exists. (citations omitted).

III. Standard of Law

Koniag is a regional native corporation created under the Alaska Native Claims Settlement Act (“ANCSA”). As such, it is expressly exempted from the Federal Securities Act of 1933 and the Securities Exchange Act of 1934.[1] Therefore, Alaska securities law governs this issue.

IV. Defendants’ April Letter to Koniag Shareholders Was a Proxy Statement

3 AAC 08.365(14) of the Alaska Administrative Code sets forth the definition of a proxy statement:

“proxy statement” means a letter, publication, press release, advertisement, radio/television script or tape, or other communication of any type which is made available to shareholders under circumstances reasonably calculated to result in the procurement, withholding, or revocation of a proxy.

This definition essentially codifies earlier federal court decisions. See SEC v. Okin, 132 F.2d 784, 786 (2nd Cir. 1943) (SEC authority over proxy solicitations extends to "any other writings which are part of a continuous plan ending in solicitation and which prepare the way for its success."); Long Island Lighting Company v. Barbash, 779 F.2d 793, 796 (2nd Cir. 1985) (communication is a proxy solicitation if, seen in the totality of the circumstances, it is reasonably calculated to influence the shareholders' votes.)

Koniag argues that the April 1997 letter was a proxy statement because it was a communication made during the execution of Defendants’ continuous plan, which ended in a proxy vote solicitation.

Defendants argue that the April letter is not a proxy statement. They claim that their letter was sent to only 430 of the 3500 Koniag shareholders, six months prior to the actual solicitation campaign. They also claim that their letter they sent to a portion of the shareholders was a different, later version of the April letter the Koniag Board sent to all 3500 shareholders with its June response.

I believe that the April letter is a proxy statement under 3 AAC 08.365(14). Defendants’ explicit statement in their November 1997 proxy solicitation “Again . . . ask[ed] and remind[ed]” Koniag shareholders “to refer to the April 2, 1997, correspondence from Frank Pagano to the shareholders . . ..”[2] This reference to the April letter in the November proxy solicitation indicates that it was sent to Koniag shareholders as part of the execution of Defendants’ proxy solicitation campaign and was calculated to influence Koniag shareholders’ proxy votes for the November election.

V. Certain Statements in Defendants’ April Letter Are Materially False and Misleading as a Matter of Law

The Alaska Securities Act prohibits misrepresentations of material fact in proxy solicitations. AS 45.55.160 provides that:

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

Under this language, a single material statement or omission of fact is sufficient to establish a violation of the statute.

Alaska regulations give broad effect to the prohibitions contained in the statute. 3 AAC 08.315(a) defines a misrepresentation as a statement that, at the time and under the circumstances in which it is made (1) is false or misleading with respect to a material fact; (2) omits a material fact necessary in order to make a statement made in the solicitation not false or misleading; or (3) omits a material fact necessary to correct a statement, in an earlier communication regarding the solicitation of a proxy for the same meeting or subject matter, which has become false or misleading.

In addition, 3 AAC 08.315(a) provides some examples of what might be a misleading statement under Alaska law: “(1) predictions as to future market values; (2) material that directly or indirectly impugns character, integrity, or personal reputation, or directly or indirectly makes charges concerning improper, illegal, or immoral conduct or associations, without factual foundation. . .”

A. Portions of the April Letter Are False and Misleading

Koniag argues that Frank Pagano’s April letter contains several misrepresentations under Alaska securities law. The alleged misrepresentations include the following:

(1) The [Koniag] Board suspended me from my position as President of our corporation after the [rape] charges were filed [against Frank Pagano]. I was not given the benefit of trial when this action was taken. I was given no opportunity to expose the falsity of the allegations in any kind of unbiased forum.[3]

(2) In late 1995 I became aware that I was being misled, lied to and blindsided by our management, counsel, and consultants. I immediately put the board on notice of my concerns and was preparing to closely examine that which I was suspicious of. Before I could put my plan into effect, I was removed from the position to do so and it was made clear I was not wanted back.[4]

(3) [While Pagano was President] I found out that actions were taking place or being planned behind my back by [Gross, Martens, and Timme] which I perceived were not in the best interests of our corporation and its shareholders. The suspicious actions I uncovered by these individuals for all intents and purposes appeared to benefit their own personal agendas more than our Corporations’ [sic].[5]

(4) With the unbridled support of our CEO, Uwe Gross, Cordez [sic] and Lexo [sic] sued Kotsiosis [sic][6] using Koniag’s money and attorney, Bill Timme. Together, they were trying to shakedown Kotsiosis for $42,000 in cash.[7]

With regard to the statement about the circumstances surrounding Mr. Pagano’s departure from the Koniag, Defendants have admitted that the allegations that Mr. Pagano was “suspended” and “removed” by the board are false, as Pagano requested the Koniag Board to put him on administrative leave with pay from his job as President of Koniag.[8] In fact, in light of the charges against him, Mr. Pagano stated that “it would be a distraction to the staff [of Koniag], if by my presence, I bring too much attention on the corporation about my case that it jeopardizes our daily business.[9] Accordingly, the statement in the April letter alleging Mr. Pagano’s suspension is false under 3 AAC 08.315(a) because it omits the fact that Pagano requested leave due to his concerns about the effect of his rape charges on Koniag’s public image.

With regard to the alleged conduct of Gross, Martens, and Timme, these statements are false and misleading under 3 AAC 08.315(a)(2) because they directly impugn these individuals’ character and integrity; and directly allege illegal conduct without factual foundation. The lack of factual foundation is discussed below.

Regarding Mr. Pagano’s allegations that he was misled, lied to, and blindsided, his supporting evidence for this statement is that it “is a true statement. It is also my opinion.” and that he felt “that I was not being given honest information.’[10]

Regarding Mr. Pagano’s allegations that Gross, Martens, and Timme were acting on behalf of their own interests, instead of Koniag’s, Mr. Pagano’s supporting evidence consists of a statement alleging that it “is a true statement . . . [and the] conduct did not appear to be, from what I can tell, in the best interests of Koniag . . . or [the] shareholders.”[11]

Regarding the “shakedown” of Kotsiosis, the only support for this statement is Mr. Pagano’s statement that it is “true.” He states that he is referring to a draft demand letter authored by Timme on behalf of ICRC Energy, Inc. to Katsiotis regarding Katsiotis’ alleged breach of a shareholder agreement and his employment contract. The draft letter states that ICRC Energy would refrain from filing suit against Katsiotis if he agreed to repay $46,000, an amount equivalent to a portion of his salary. Pagano states that he is also referring to a second demand letter seeking the return of certain information in lieu of filing a lawsuit.[12]

The above-mentioned factual support is insufficient to establish a disputed issue of material fact as to the allegations contained in the statements. Assertions that Mr. Pagano believes his statements are “true” and are his “opinion” are insufficient to establish a material issue of disputed fact under Rule 56(e). The Defendants must set forth actual facts, not conclusory statements.[13]

B. The False & Misleading Statements Are Material

3 AAC 08.315 provides that “A misrepresentation is material if there is a substantial likelihood that a reasonable shareholder would consider it important in deciding how to vote . . . Subjective proof that one or more shareholders actually granted a proxy because of a misrepresentation is not required.” The regulation’s language defining materiality is taken from the holding in Brown v. Ward, 593 P.2d 247 (Alaska 1979) (adopting the standard for materiality of facts in proxy solicitations set out in TSC Industries v. Northway, Inc., 426 U.S. 438 (1976) as the Alaska common law standard).[14]

Koniag argues that pursuant to the Alaska Supreme Court opinion in Brown v. Ward, 593 P.2d 247 (Alaska 1979), summary judgment may be granted on issues of materiality.

Defendants argue that given the large number of conflicting factual issues, and the large number of reasonable inferences to be drawn therefrom, the standard for materiality set out by the U.S. Supreme Court in TSC Industries v. Northway, Inc., 426 U.S. 438 (1976), prevents the granting of Koniag’s summary judgment motion and requires an ordinary trial. The TSC court stated, “Only if the established omissions are ‘so obviously important to an investor, that reasonable minds cannot differ on the question of materiality’ is the ultimate issue of materiality appropriately resolved ‘as a matter of law’ by summary judgment.” Id. at 450 (citations omitted).

However, Defendants’ proposition ignores the result in Brown, which adopted the TSC standard for materiality. After the Brown court found that the statements at issue were materially misleading, it went on to state “[s]ince we find Ward’s proxy solicitations to be materially false as a matter of law, no further evidence need be received . . .” Brown at 251. Accordingly, as discussed below, I believe that the statements referenced in this order are so obviously important to Koniag shareholders in deciding how to vote their proxies, that reasonable minds could not differ on this conclusion. Therefore, they are material and summary judgment is appropriate in this case.

Mr. Pagano’s statement regarding the circumstances surrounding his departure is material. Clearly it would be important to a Koniag shareholder, voting for candidates for the Koniag Board, to know whether or not the Board “suspended” and “removed” Mr. Pagano because he discovered their alleged personal agendas and got rid of him in order to cover-up any improprieties on their part.

With regard to the statements about the conduct of Gross, Martens and Timme, it is undeniable that a reasonable shareholder would consider the following facts important when voting their proxies: the officers of the corporation lie, mislead and blindside; they place their personal interests above the interests of the corporation; and they shakedown individuals for tens of thousands of dollars.

Moreover, Defendants themselves seem to think these allegations are material. In the proxy solicitation, Mr. Pagano stated to Koniag shareholders, “Judging from the board’s and management’s performance of our affiliates . . . I for one, do not want them managing what rightfully belongs to me.”[15]

VI. Defendants’ Proxy Solicitation Fails to Comply with Alaska Securities Law Regarding Non-board Proxy Solicitations

3 AAC 08.355(8) requires that a non-board proxy solicitation must be preceded or accompanied by a dated, written proxy statement including . . . a statement of the total amount estimated to be spent and the total amount already expended on the solicitation of proxies.” Furthermore, 3 AAC 08.355(9) requires “a statement indicating who will bear the expense of the solicitation, and the amount each participant in the solicitation has contributed or has agreed to contribute, unless the participant is a contributor of less than $500 in the aggregate.”

An examination of the proxy solicitation[16] reveals that Defendants failed to provide any information regarding the costs and expenses of their proxy solicitation. Moreover, Defendants, and their expert, Lawrence Carroll, admit that Defendants did not comply with these disclosure requirements.[17]

Consequently, Defendants’ proxy solicitation is in violation of Alaska securities law.

VII. Koniag Has Established That Defendants’ Proxy Statements Contained False and Misleading Statements of Material Fact. Therefore, Summary Judgment Is Appropriate as to Count I of Koniag’s Complaint.

Count I of Koniag’s first amended complaint alleges that “[the defendants’] false and misleading statements in proxy solicitations and in the distribution of non-board solicitations and [sic] are in violation of Alaska statutory and regulatory law.[18] Koniag has established 1) false and misleading statements of material fact,[19] 2) failure to comply with Alaska securities law regarding non-board proxy solicitations. Summary judgment is granted, therefore, on Count I of Koniag’s first amended complaint.

DONE this 5th day of February, 1999, at Anchorage, Alaska.
Brian Shortell, Superior Court Judge

I. INTRODUCTION

Robert Rude and Harold Rudolph are shareholders and former directors of Cook Inlet Region, Inc. (CIRI). They distributed a joint proxy solicitation in an attempt to be elected to the CIRI board of directors at CIRI’s 2010 annual meeting. Rude and Rudolph accumulated over one quarter of the total outstanding votes, but CIRI’s Inspector of Election refused to allow them to cumulate their votes. Thus, their votes were split evenly between the two of them and neither was seated. We conclude that the language of this proxy form required the shareholders’ votes to be equally distributed between Rude and Rudolph unless a shareholder indicated otherwise. We therefore affirm the superior court’s decision granting summary judgment in favor of CIRI on this issue.

CIRI cross-appeals, arguing that the superior court should have awarded attorney’s fees under Alaska Civil Rule 68, as well as sanctions against plaintiffs’ counsel under Alaska Civil Rule 11. We conclude that the superior court was not required to order sanctions, but we remand for reconsideration of the attorney’s fee award.

II. FACTS AND PROCEEDINGS

CIRI is an organization created under the Alaska Native Claims Settlement Act (ANCSA). CIRI is governed by a 15-member board of directors, with the directors serving staggered three-year terms; five directors are elected every June at the annual meeting. Since 1997, CIRI has rotated its annual meeting between three locations: Anchorage, Kenai, and Puyallup, Washington. The 2010 annual meeting was held in Puyallup. For each election, the board chooses a slate of five recommended candidates for whom it solicits proxies. Rude and Rudolph are CIRI shareholders and former directors. In 2010, neither Rude nor Rudolph was an incumbent director; they distributed a joint proxy statement calling themselves the “R&R Alliance” (R&R).

CIRI’s 2010 election was coordinated and supervised by an Inspector of Election. On June 3, 2010, two days before the June 5 annual meeting, CIRI sent a letter to the Inspector, urging him to find that the R&R proxy did not give Rude and Rudolph authority to cumulate the votes they received. Rudolph responded by sending his own letter to the Inspector. In it, he withdrew his candidacy and asked that he and Rude be allowed to cumulate all of the R&R proxy votes, which amounted to 27% of the total, in Rude’s favor. The Inspector split the R&R votes evenly between Rude and Rudolph, and as a result neither was elected to the board.

Rude, Rudolph, and Brenda Nicoli, on behalf of herself as well as a putative class of CIRI shareholders,[1] filed claims against CIRI challenging, among other things, the result and fairness of the 2010 board election. They sought monetary damages as well as equitable relief.  CIRI moved for summary judgment on all claims, which the superior court granted. The Shareholders now appeal the grant of summary judgment as to their election claims.

There is also some relevant prior history between these parties. CIRI sued Rude and others in Alaska Superior Court in 2008. There, Rude and his co-defendants raised several counterclaims that were similar to some of the claims they raise in this case. The superior court granted summary judgment to CIRI in the 2008 case and this court affirmed that decision in 2012.[2]

In 2009, Rude and Rudolph sent CIRI shareholders four mailers in an attempt to change certain stock alienability restrictions and to call a special meeting on six resolutions. In December 2009, CIRI sued Rude and Rudolph in federal court for making materially false and misleading statements in the four mailers and for breaching confidentiality obligations. Rude and Rudolph raised some of the same counterclaims that they had raised in the 2008 case, and the federal court found that their arguments were barred by res judicata.

III. STANDARD OF REVIEW

“Summary judgment is proper if there is no genuine factual dispute and the moving party is entitled to judgment as a matter of law.”[3] We review the superior court’s grant of summary judgment de novo.[4] We resolve questions of mootness using our independent judgment.[5] The application of Rule 68 is a question of law that we review de novo.[6]

 The award of attorney’s fees[7] and Rule 11 attorney sanctions[8] are generally reviewed for abuse of discretion.

IV. DISCUSSION

A. Mootness

“We refrain from deciding questions where the facts have rendered the legal issues moot. A claim is moot if it has lost its character as a present, live controversy.”[9]

The Shareholders raise several claims related to the fairness of the 2010 CIRI board election.  CIRI argues that these issues are now moot because the five board members who were elected in 2010 have now finished their terms. The Shareholders respond that these issues are not moot because even though Rude cannot now serve during the 2010­-2013 term, he should still be paid fees as if he had.

Although the Shareholders have not previously raised this argument, it is a proper response to CIRI’s mootness claim. The possibility of this compensation if the Shareholders prevail suggests that the controversy remains unsettled. In addition, there is a reasonable argument that these election fairness claims are capable of repetition and evading appellate review.[10] The policies that the Shareholders dispute, including the counting of proxies and the location of the annual meeting, apply on a recurring basis, and there is a reasonable potential that these claims will continually evade appellate review. In addition, we need to decide these claims in order to decide the issue of attorney’s fees.[11]

B. The Cumulative Voting Issue

The first claim in this appeal is that the election inspector unlawfully refused to allow Rude to cumulate votes under the proxy he held with Rudolph. In Alaska, a shareholder has the right to cumulate his votes unless the articles of incorporation provide otherwise.[12] For ANCSA corporations, there is a special regulation that provides: “If action is to be taken on the election of directors and if the shareholders have cumulative voting rights, a proxy may confer discretionary authority to cumulate votes.”[13] This regulation implies that a proxy must explicitly “confer” the “discretionary authority to cumulate votes.”

This implication is supported by a case from the Third Circuit Court of Appeals: “Whether a shareholder intends to authorize the proxyholder to cumulate votes for fewer than the authorized number of directors should be determined by examining the proxy form itself.”[14] Delaware cases also support the proposition that the shareholder’s intent should be determined from the language of the proxy.[15]

These authorities are consistent with the language of the election rules adopted by the CIRI Board of Directors. The CIRI election rules do not explicitly require a proxy to authorize cumulative voting, but state: “The plain words of the proxy shall control,” and “[i]n general, the Inspector of Election shall not use evidence outside the proxy form itself.” The election rules give examples of the interpretation of a board proxy that suggest that a shareholder’s votes will be distributed equally among the candidates named on the proxy form “unless the shareholder unambiguously directs another allocation.” Finally, the rules specifically provide: “In order to avoid misleading proxy solicitations, a candidate may not voluntarily withdraw his or her candidacy in order to make his or her votes available for another candidate.”

The language of the R&R proxy was fairly clear: “If this proxy is signed and no specific direction is given, it will be voted for Robert W. Rude and Harold F. Rudolph.” The proxy continued: “You may withhold authority to vote for one of [sic] more of the nominees named here by lining through or otherwise striking out the nominee’s name.” The language of the proxy thus suggested that the shareholder’s votes would be equally distributed between the candidates unless otherwise indicated on the face of the proxy. Therefore, the election inspector properly voted the proxies equally for Rude and Rudolph.[16]

C. The Meeting Location Issue

The second claim in this appeal is that the Shareholders’ participation at the 2010 annual meeting was unfairly curtailed because the meeting was held in Washington state. Under Alaska law, “[m]eetings of shareholders shall be held at a place inside or outside this state as provided in the bylaws.”[17] The CIRI bylaws state: “Meetings of the shareholders shall be held at the principal office . . . or at such other place, either within or without the State of Alaska, as the Board of Directors may designate.” This claim is thus controlled by the general rule that corporate directors must exercise their duties “in good faith, in a manner the director reasonably believes to be in the best interests of the corporation, and with the care, including reasonable inquiry, that an ordinarily prudent person in a like position would use under similar circumstances.”[18]

In this case, there was a reasonable basis for the board’s decision to hold its annual meeting in Washington state every third year. Approximately 38.5% of CIRI shareholders reside outside Alaska. The board could reasonably conclude that those shareholders would have greater potential access to a meeting held in Washington than to a meeting held in Alaska. The superior court properly granted summary judgment for CIRI on this issue because the directors made a reasonable decision to hold the 2010 annual meeting in Washington, a decision that was consistent with the corporate bylaws and the relevant statute.

D. The Remaining Election Fairness Claims

The Shareholders raise several additional election fairness claims. They first argue that the board’s proxy statement did not disclose that the election was contested and that CIRI improperly excluded the independent candidates’ names from CIRI’s proxy. But we have previously held that the applicable regulations do not require the board to include independent candidates in the board’s proxy statements.[19]

Rude and Rudolph also argue that CIRI’s proxy did not allow voting on corporate resolutions submitted by independent candidates.[20] In 2010, however, the federal court found that this argument had been rejected on the merits by the superior court in the 2008 case. In the 2008 case, the superior court ruled that “CIRI did not have to include [the independent candidates’] proposed resolution in its proxy.” We thus conclude that this argument is barred by collateral estoppel, which precludes “the relitigation of issues actually determined in earlier proceedings.”[21]

The Shareholders also argue that CIRI’s proxy form did not provide a blank space in its proxy to allow voting for write-in candidates. This claim is factually inaccurate because the board’s proxy statement did have a blank line for write-in candidates. We rejected this argument in the 2008 case,[22] and it was also disposed of previously in the federal case.

Finally, the Shareholders argue that CIRI unfairly required the independent candidates to pay for their own campaigns. We conclude that this claim is waived due to inadequate briefing.[23] It also appears that this claim was previously raised and decided in the 2008 case.[24]

E. Attorney’s Fees

On January 5, 2011, CIRI made timely Alaska Civil Rule 68 offers of judgment to each of the Shareholders in the amount of $1,500, “in resolution of all claims” and “inclusive of all interest, attorney’s fees, and costs.” After judgment was entered in its favor, CIRI moved for attorney’s fees under Civil Rules 68 and 82, and the superior court granted fees under Rule 82. The Shareholders appeal the Rule 82 fee award. CIRI cross-appeals the court’s denial of Rule 68 fees. CIRI also moved for sanctions under Rule 11, but the superior court denied that motion.  CIRI now cross-appeals that decision as well.

When the superior court denied CIRI’s request for attorney’s fees under Rule 68, it reasoned that the offers of judgment that CIRI made to the Shareholders “were too low.” The court’s order appears to be based on Beal v. McGuire[25] and Anderson v. Alyeska Pipeline Service Co.[26] In Beal this court held: “Even though a purpose of Rule 68 is to encourage settlement and avoid protracted litigation, offers of judgment made without any chance or expectation of eliciting acceptance or negotiation do not accomplish the purposes behind the rule.”[27] We concluded that offers of judgment of one dollar each, where there were “potentially substantial damages,” “could not be considered valid” for purposes of Rule 68.[28] Later, in Anderson, we applied the Beal analysis to a ten-dollar offer: “there was no objectively reasonable prospect that Anderson would accept ten dollars to settle her case — or that the offer would even start a dialogue that could lead to settlement — at that stage of the litigation.”[29]

We conclude that the offers in this case of $1,500 for each plaintiff were not too low to satisfy these precedents. In this case, the Shareholders’ claims were particularly weak. Many of the claims were barred by collateral estoppel, and the Shareholders had plenty of time to conduct discovery to assess their claims before the offers were made.

The Shareholders cite Gold Country Estates Preservation Group, Inc. v. Fairbanks North Star Borough[30] for the proposition that a Rule 68 money offer is not appropriate where the relief being sought is equitable. In that case, we noted “that a citizen litigant’s claim alleging violation of the Open Meetings Act, with no accompanying claim for monetary damages, is unlikely to be an appropriate vehicle for a Rule 68 offer.”[31] We reasoned that where there is no claim for monetary damages, “[a] Rule 68 offer of judgment serves no legitimate purpose.”[32] Likewise, in Fernandes v. Portwine, this court rejected a Rule 68 offer of judgment which by its terms encompassed only the legal, and not the injunctive, claims made by the offeree.[33] We held the “offer of judgment was not comprehensive, definite and unconditional; it did not encompass any of the equitable claims.”[34]

In this case, however, the Shareholders sought both monetary and equitable relief in their complaint. The plaintiffs’ damage claims were substantial — their prayer for relief requested monetary damages for CIRI’s allegedly unfair election practices, punitive damages, unpaid directors’ fees for Rude and Rudolph totaling over $200,000, and a money award to the putative class from a common fund. So the $1,500 offers of judgment did serve the legitimate purpose of addressing the Shareholders’ claim for damages. And CIRI’s offers were clearly worded to end the litigation by covering all the claims, not just the damage claims. Thus, the fact that the Shareholders were also seeking equitable relief does not invalidate CIRI’s offers.

We conclude that we should remand this case to allow the superior court to reconsider CIRI’s motion for Rule 68 attorney’s fees. In addition, the attorney’s fees awarded to CIRI should be apportioned among the individual plaintiffs.[35]

When the superior court denied CIRI’s motion for Rule 68 fees, the court referred to Nicoli’s motion for class certification.[36] Some federal courts have opined that when a defendant makes a Rule 68 offer to a class representative before certification, “the named plaintiff will . . . find his fiduciary obligations to the putative class members pitted against his own self-interest.”[37] That is, the representative’s personal interest in the offer conflicts with his obligation to the putative class, which has no other representative at that stage in the proceedings. Nicoli may renew this argument on remand.[38]

F. Rule 11 Sanctions

The superior court denied CIRI’s motion for Rule 11 sanctions against the shareholders’ attorney, Fred Triem. CIRI argued in its sanctions motion that Triem violated Rule 11 by filing the initial complaint and several postjudgment motions. CIRI’s argument is that the claims therein were clearly barred by collateral estoppel, and thus Triem was in violation of Rule 11’s requirement that legal arguments not be frivolous. But CIRI concedes: “Even where Rule 11 has been violated, entry of sanctions in a particular case is left to the superior court’s discretion.”[39] We conclude the superior court’s decision not to impose sanctions was within its discretion.[40]

V. CONCLUSION

We AFFIRM the superior court’s grant of summary judgment to CIRI as to all claims. We VACATE and REMAND the court’s attorney’s fee determination. We AFFIRM the court’s denial of Rule 11 sanctions.

Opinion

I. INTRODUCTION

In 2008 Robert Rude, then a sitting Cook Inlet Region, Inc. (CIRI) director, and three other candidates ran as an independent “New Alliance” slate for positions on the CIRI board of directors. Shortly before the election, CIRI filed suit, claiming that the New Alliance proxy materials contained materially misleading statements. Rude and his co-defendants counterclaimed, alleging that CIRI’s election procedures were unfairly tilted toward the interests of the current board and that the directors had improperly refused to disclose shareholder and corporate information to Rude and the other New Alliance candidates. The superior court granted summary judgment on all claims and counterclaims in favor of CIRI. As a result, the New Alliance proxies were voided, and Rude was not re-elected to the board. Rude appeals the rulings both on CIRI’s claims and his counterclaims. Although Rude’s claims are now technically moot, we address them insofar as they potentially affect prevailing party status. Because no issue of material fact exists as to the claims at issue and because CIRI is entitled to judgment as a matter of law, we affirm the superior court.

In a separate appeal, Rude challenges four other rulings of the superior court. First, he challenges the award of attorney’s fees to CIRI. Second, he challenges the superior court’s denial of his Rule 60(b) motion for relief from judgment. Third, he challenges the superior court’s exclusion of exhibits filed with that motion. Finally, he challenges the superior court’s dismissal of New Alliance as a party to this suit. Because the superior court did not abuse its discretion in any of these rulings, we affirm the superior court in all respects.

II. FACTS AND PROCEEDINGS[1]

A. Background

Cook Inlet Regional, Inc. (CIRI) is an Alaska Native Claims Settlement Act (ANCSA) corporation organized under Alaska law. It is governed by a 15-member board of directors, serving staggered three-year terms. Each year five director positions are up for election by the shareholders, and each year the board of directors recommends five candidates for the shareholders’ vote and solicits proxies[2] for those five candidates. In addition to the board’s recommended slate, other candidates often run.

B. Board Endorsement And Formation Of New Alliance Slate

For the 2008 elections, Robert Rude, as well as Dorothy J. Anagick, Chris Kiana, and Mike Thomas, ran for seats on the board.[3] Rude was at that time an incumbent director whose term was set to expire at the annual meeting at which elections would be held. The other three candidates were not incumbent directors. All four applied for board endorsement. At a March 2008 board meeting, the board selected five candidates, including Rude and Thomas, to be the board-recommended slate.[4] One week later, the board voted to reconsider its selections and selected a new slate, this time without Rude or Thomas.[5]

Under CIRI’s rules, individuals who wish to run for the board of directors, but who are not included in the board-endorsed slate, may still be included in CIRI’s proxy materials. Such individuals are listed, along with their photographs and background information, in CIRI’s proxy statements;[6] their names are listed on the proxies; and their information and personal statements are included in the CIRI voter guide. In 2008 three “other candidates” opted to be included in CIRI’s proxy materials. Rude, along with Thomas, Kiana, and Anagick, chose not to be included in CIRI’s proxy materials, instead opting to run as a slate under the aegis of the New Alliance for the Future of CIRI, Inc. (New Alliance).

C. Proxy Solicitation

On March 28, 2008, New Alliance began soliciting proxies on behalf of the four candidates and for a New Alliance proposal for a special dividend of $50 per share.[7] Around the same time, Rude sent an email to CIRI President and Chief Executive Officer Margie Brown requesting that CIRI include in its proxies either New Alliance’s proposal for a special dividend or a statement of how the CIRI board would vote its proxies on such a proposal. Brown declined both requests. Brown also declined Rude’s request for the email addresses of each CIRI shareholder.

Shortly after New Alliance sent its first proxy materials, CIRI filed a complaint with the Division of Banking, Securities and Corporations, alleging that New Alliance’s proxy solicitations contained false and misleading statements concerning, most importantly, CIRI’s alleged failure to pay adequate dividends in the past. While CIRI, New Alliance, and the Division communicated back and forth regarding CIRI’s complaint to the Division,[8] New Alliance continued to solicit proxies through three additional mailings and to maintain a website explaining its campaign for the four candidates and for a special dividend.

These additional New Alliance mailings, as well as the New Alliance website, contained a number of statements which CIRI believed to be false or misleading. These statements, described in more detail below, concerned, among other things, management compensation, allegations that CIRI had “liquidated” or sold significant landholdings, shareholders’ rights under Alaska law and ANCSA, CIRI’s election procedures, and CIRI’s dividend policy. In CIRI’s words, the statements as a whole gave the false impression that “[a]lthough CIRI as a corporation has done well in earning a profit over the years, the CIRI Board majority (and management) have refused to share the corporation’s success with the shareholders, instead keeping the vast majority of the net profits for themselves.”

Meanwhile, starting in April 2008, CIRI began soliciting its own proxies. CIRI’s first proxy solicitation included a proxy statement, including biographies of the board-endorsed candidates as well as three “other candidates.” The proxy statement also included information about continuing directors (i.e., those not up for re-election) and corporate information, including information about the current board of directors and election procedures. The enclosed proxy included the names of the five board-recommended candidates, as well as the three “other candidates” and a blank line labeled “Write-In Candidates.” The proxy did not include a space for shareholders to vote on New Alliance’s proposed special dividend.

CIRI’s second proxy mailing, mailed approximately one week after the first, included a voter guide with more in-depth information about the eight candidates on the proxy, along with CIRI’s annual financial report, a flyer in support of the board-endorsed candidates, and another proxy form with the same information as the first. CIRI subsequently sent two more mailings that included proxy forms and information supporting its endorsed candidates. Throughout its proxy mailings, CIRI touted its “Early Bird Prizes” – cash prize drawings for shareholders who returned proxies “for any proxy holder or candidate” before the May 30 deadline.

D. The Lawsuit And The Election

On June 5, two days before the scheduled shareholder meeting, CIRI filed suit against Rude, Anagick, Kiana, Thomas, and New Alliance, alleging that their proxy materials contained numerous false and misleading statements. The suit sought to void the New Alliance proxies.

Before the New Alliance candidates could respond, the shareholder meeting was held, and Rude and Thomas had the most votes to win election to the board. At the meeting, Thomas proposed the special dividend of $50 per share, but it was defeated when CIRI voted its proxies against the measure.

Following the election, the New Alliance candidates answered CIRI’s complaint and filed numerous counterclaims. In its counterclaims, New Alliance[9] alleged generally that CIRI’s election procedures were unfair because CIRI favored its slate of candidates over the New Alliance candidates. New Alliance also counterclaimed that CIRI’s proxy forms were deficient because CIRI mailed the first forms before it distributed its financial report, CIRI failed to put enough slots on the proxies for write-in candidates, CIRI omitted the names of the New Alliance candidates from its proxy forms and materials, and CIRI failed to inform shareholders of the New Alliance special dividend proposal or give shareholders a way to vote on it. Rude also alleged that CIRI omitted his name from proxy materials despite the fact that he was a current director, and that this omission amounted to de facto removal from the board. Finally, New Alliance counterclaimed that CIRI improperly refused the New Alliance candidates’ requests for lists of shareholders’ names and phone numbers.[10]

CIRI moved for summary judgment on its claims against New Alliance. New Alliance moved for partial summary judgment on its counterclaims against CIRI, and CIRI filed a cross-motion for partial summary judgment on the counterclaims. The superior court granted summary judgment in favor of CIRI on both sets of claims.

E. CIRI’s Motion For Summary Judgment

In her ruling on CIRI’s motion for summary judgment on the claims against New Alliance, pro tem Superior Court Judge Morgan Christen found that five sets of statements in New Alliance’s proxy solicitation materials were misleading as a matter of law.

First, the superior court found materially misleading New Alliance’s claims that CIRI’s senior managers’ compensation had increased by 32% between 2006 and 2007 (as opposed to a 9.5% increase in shareholder dividends). The superior court reasoned that these claims were misleading because the New Alliance numbers had counted accruals under a long-term incentive plan that “were not fully vested and may never be paid.” The superior court further found that these statements were material as a matter of law “because a reasonable shareholder would consider it important when deciding how to vote if CIRI management’s pay increased by 32% in one year.”

Second, the superior court found materially misleading New Alliance’s claims that CIRI was being “liquidated” and that CIRI land entitlements had been reduced by 700,000 acres of surface and 1,000,000 acres of subsurface estate. The superior court determined that these statements were misleading because there was no evidence in the record to support New Alliance’s contention that CIRI was being liquidated or selling off such significant landholdings. The superior court further found that New Alliance did not have a good-faith basis for such a belief. The superior court found that these statements were material as a matter of law “because a reasonable shareholder would of course consider it important when deciding how to vote if he/she understood that 700,000 acres of surface estate and 1,000,000 acres of subsurface estate had been liquidated without explanation.”

Third, the superior court found materially misleading New Alliance’s statement that:

Section 2(b) of ANCSA says Natives shall have maximum participation in decisions affecting their rights and property.

We believe shareholder participation is lacking in our corporation…. Shareholders do not get to vote on: the sale of large ANCSA land and natural resource properties; large cash donations; the granting of CIRI owned stock to senior executives; political donations; large payments made to lobbyists and consultants; nor do they get to vote on legislation that would affect the rights or property. We want to change this!

The superior court concluded that these statements were misleading because they suggested that shareholders had a right to participate in CIRI’s management decisions and that “the board [was] improperly denying shareholders’ input into corporate governance.” Instead, the superior court noted, “under Alaska law, the board of directors, not shareholders[,] has the right to make … management and operational decisions.” The superior court found that New Alliance’s statements to the contrary were material because “[t]here is a substantial likelihood that a reasonable shareholder would consider the statement about shareholders’ voting rights important in deciding how to vote.”

Fourth, the superior court found materially misleading New Alliance’s statements that “New Alliance candidates have to pay their own election expenses” and “[i]ndependent candidates … have to pay their own campaign expenses which often cost an independent candidate tens of thousands of dollars and, if elected, they are not reimbursed their campaign expenses.” The superior court concluded that these statements were misleading because the New Alliance candidates could have had some of their campaign expenses paid for if they had chosen to follow CIRI’s procedures for being included in CIRI’s proxy materials as “other candidates” and because CIRI did pay for some of the expenses for Rude to attend an informational meeting for shareholders in Washington. The superior court found that these statements were material as a matter of law because there was “a substantial likelihood that a reasonable shareholder would consider th[ese] statement[s] important in deciding how to vote … [because they] perpetuate[d] the theme that minority board members are being treated unfairly by the majority.”

Fifth, the superior court found materially misleading New Alliance’s statements that “never again will a hardcore minority of 6 directors control our corporation.” Although New Alliance claimed it was referring to one faction’s de facto control of the board, the superior court concluded that this statement was misleading because “[a] minimum of eight of the fifteen directors is required to command a majority.” The superior court found that the statement was material as a matter of law because “there [was] a substantial likelihood that a reasonable shareholder would consider this statement important in deciding how to vote … because it implies that a ‘super minority’ is somehow improperly controlling the corporation.”

The superior court concluded that because the misrepresentations in New Alliance’s proxy materials were sufficiently “egregious,” the proxies given to New Alliance “must be declared void.” Because the New Alliance proxies were declared void, Rude and Thomas, who had previously collected enough proxies to win election to the board of directors, were removed from their seats.

F. New Alliance’s Motion For Summary Judgment And CIRI’s Cross-Motion

On the same day that it granted CIRI’s motion for summary judgment, the superior court also granted CIRI’s cross-motion for partial summary judgment on New Alliance’s counterclaims and denied New Alliance’s motion for partial summary judgment. Based on its understanding of New Alliance’s motion, the superior court identified eight claims in the motions before it, of which only the first five are raised in this appeal. Those claims were whether CIRI violated Alaska securities law and common law proxy rules by:

1. sending out its proxy statement and proxy to the shareholders before sending out its annual report;
2. failing to comply with the proxy requirements under 3 AAC 08.335;
3. failing to disclose material information on its proxy, including the names and information of all the candidates who were running for the board;
4. failing to provide sufficient space on the proxy for the shareholders to write in the names of other candidates; [and]
5. failing to disclose New Alliance’s proposal for a special dividend and to provide a way for shareholders to vote on it; ….

As to the first issue, the superior court noted:

Alaska proxy regulation 3 AAC 08.345 provides:

(a) The solicitation of proxies on behalf of the board for an annual meeting must be preceded or accompanied by the annual report for the corporation’s last fiscal year, unless

1. the solicitation is made on behalf of the board before the annual report is available;
2. solicitation is being made at the time in opposition to the board; and
3. the board’s proxy statement includes an undertaking to furnish the annual report to all shareholders being solicited at least 50 days before the date of the annual meeting. (Emphasis added by superior court.)

The superior court found that all three of these requirements had been met. The superior court noted that CIRI had filed a sworn statement that its financial statement was not yet ready when CIRI sent its first proxy mailing. The superior court found that, although New Alliance asserted that CIRI had the necessary information to publish its annual report before it solicited proxies, there was no evidence to support this, and the superior court therefore determined that CIRI had met the first prong. The superior court then noted that there was no dispute that CIRI had satisfied the second prong. Finally, the superior court noted that CIRI’s initial proxy statement included an undertaking to furnish the annual report to shareholders at least 50 days before the annual meeting. Although New Alliance alleged that voters should not be asked to vote before they have information that a reasonable shareholder would view as significant in deciding how to vote, the superior court found that Alaska law specifically permitted CIRI to solicit proxies in response to New Alliance’s solicitation and thus granted summary judgment to CIRI on this issue.

As to the second and third claims, New Alliance contended that CIRI’s proxies should be voided because the proxy statement and voter guide failed to disclose the names of all candidates running for the board and because they failed to disclose that Rude was a member of the board of directors running for re-election. But the superior court concluded that Alaska proxy regulation 3 AAC 08.345(b),[11] which governs proxy statements, did not require CIRI to do either and that CIRI had in fact provided the New Alliance candidates a way to be included in the proxy materials. Further, in its cross-motion, CIRI argued that its proxy fully met the requirements set out in 3 AAC 08.335,[12] and the superior court agreed. The superior court therefore granted summary judgment to CIRI on this claim.

On the same claim, New Alliance argued that CIRI violated two common law proxy rules – the Equal Prominence Rule and the Buried Facts Rule – by giving Rude less prominence than other directors in CIRI proxy materials. The superior court rejected this argument for two reasons. First, the court noted that “when the legislature enacts a statute to govern a matter previously addressed by the common law, the statute controls,” and therefore the proxy regulations discussed above, not common law rules, controlled. Second, the court found that even if the common law rules were applicable, Rude was given the same treatment as other current directors in those parts of the proxy materials applying equally to all directors. And because he was not a continuing director, a board-endorsed candidate, or an “other candidate,” he was not included in those sections. The superior court therefore concluded that CIRI did not violate the Equal Prominence Rule or the Buried Facts Rule.

As to the fourth claim, New Alliance argued that the write-in section of CIRI’s proxies was insufficient and misleading because it only contained one blank line following the term “Write-In Candidates.” The superior court, though, found no legal authority for New Alliance’s claim that proxies were required to have multiple write-in slots and further found that CIRI’s use of the plural “candidates” would lead a reasonable voter to understand that it was permissible to write in more than one name. The superior court consequently found that CIRI’s write-in section complied with Alaska law.

Finally, the superior court concluded that CIRI’s proxy was not required to disclose New Alliance’s proposal for a special dividend, nor to provide a way for shareholders to vote on it. The superior court concluded that the Alaska Securities Act required CIRI “to include a proposal in its proxy statement when the board intends to introduce a resolution to the shareholders” but that “[t]hird-party proposals which may or may not be introduced at an annual meeting are not required to be in a corporation’s proxy and proxy statement.” Accordingly, the court concluded that CIRI did not have to include New Alliance’s proposal in its proxy materials.

Although granting summary judgment to CIRI on CIRI’s claims and on all of the counterclaims at issue in the cross-motions for partial summary judgment, the superior court issued a further order clarifying that it had dismissed “only those counterclaims that were the subject of the motion practice, not all of the defendants’ counterclaims.” Nevertheless, Anagick, Thomas, and Kiana entered a stipulation and order dismissing with prejudice all counterclaims against CIRI on behalf of themselves and New Alliance. Accordingly, Robert Rude was left as the only defendant and counterclaimant.

G. CIRI’s Final Motions For Dismissal And Summary Judgment

In August 2009, pro tem Superior Court Judge Peter G. Ashman, who had taken the case over from Judge Christen, ordered Rude to file a statement outlining any claims Rude had against CIRI which remained live. When Rude failed to respond, CIRI moved for dismissal, and Rude opposed. The superior court dismissed Rude’s counterclaims for failure to comply with the court’s August 2009 order. The superior court also found that CIRI was entitled to dismissal “on substantive grounds,” noting that Judge Christen’s order on partial summary judgment had decided all of Rude’s claims relating to CIRI’s election procedures and that Rude’s remaining claims concerning his demand for shareholders’ information were now moot because Rude had been removed as a director.

Rude moved for reconsideration of the dismissal, and the superior court, though noting that Rude had offered no explanation for his failure to respond to the August 2009 order, granted the motion, specifying that it would treat CIRI’s motion to dismiss as a motion for summary judgment. The superior court limited briefing to what it found were the only four remaining issues, namely Rude’s claims that (1) CIRI unfairly took sides in elections and improperly used its resources to support its candidates; (2) “CIRI’s policies and practices are improperly intended to entrench incumbents”; (3) CIRI refused to give Rude shareholder addresses and email addresses, information to which he was entitled as a director; and (4) CIRI refused to give Rude other corporate information to which he was entitled as a director. The superior court gave CIRI an opportunity to supplement its motion as appropriate for summary judgment and for Rude to respond.

In January 2010, after hearing oral argument, Superior Court Judge Frank A. Pfiffner, who had taken over the case from Judge Ashman, issued an oral decision granting CIRI’s motion for summary judgment on the remaining counterclaims.

As to the first two issues, that CIRI took sides and their election policies entrench incumbents, the superior court concluded that they had been disposed of by Judge Christen’s earlier order on CIRI’s cross-motion for partial summary judgment. The superior court determined that once summary judgment was granted in favor of CIRI regarding the specific claims of unfair election practices, the more general claims were unsupported and fell away. As to the second two issues, the superior court concluded that they were moot. The superior court noted that AS 10.06.450(d) did grant directors the right to certain corporate information but found that because Rude’s proxies were invalid, he did not win the election and so was not a director.

With regard to a fifth issue, that Rude was entitled to certain corporate information as a shareholder, the superior court rejected this argument for a number of reasons. First, because this issue was outside the scope of the prior order outlining the remaining issues, the court found that Rude had abandoned the claim. Second, the superior court found that Rude had not made any requests in his capacity as a shareholder, but instead only in his capacity as a director. Finally, the superior court determined that even if Rude made requests as a shareholder, any requests did not meet the statutory requirement of shareholder requests for information because the requests did not state “with particularity the purpose of the inspection, identifying that it was a proper purpose and that the documents were connected to an otherwise proper purpose” as required under AS 10.06.430(b). Although the superior court noted that Judge Christen had refused to grant summary judgment as to several of CIRI’s claims that statements in the New Alliance proxy materials were misleading, the court, with CIRI’s agreement, concluded that there were no issues remaining and ordered CIRI to draft a final judgment. Rude moved for reconsideration, and it was denied.

H. Post-Judgment Proceedings

The superior court ordered Rude to pay $43,773.80 in attorney’s fees and $5,441.14 in costs, for a total monetary judgment of $49,214.94.

After filing a notice of appeal, Rude filed a motion for relief from judgment. Rude attached to his motion over 30 new exhibits. CIRI opposed the motion and moved to strike the new exhibits. The superior court granted CIRI’s motion to strike the new exhibits, finding that they were irrelevant to the motion, untimely, and unauthenticated. The superior court also denied Rude’s motion for relief from judgment, ruling that Rude’s motion was not based on a mistake of law or newly discovered evidence as required by Alaska Civil Rule 60(b), but was rather a rehash of his earlier arguments and an attempt to introduce evidence that was unauthenticated and that had been available for timely introduction during the litigation.

Rude has filed two appeals. In the first he appeals many of the substantive matters decided in the superior court’s three orders on summary judgment. In the second he challenges four procedural matters: (1) the superior court’s award of costs and attorney’s fees to CIRI; (2) the superior court’s denial of Rude’s Rule 60(b) motion for relief from judgment; (3) the superior court’s order striking exhibits attached to the 60(b) motion; and (4) the superior court’s entry of a stipulation dismissing the New Alliance corporation as a party.

III. STANDARDS OF REVIEW

We review grants of summary judgment de novo.[13] In reviewing a grant of summary judgment, we will “determine whether any genuine issue of material fact exists and whether the moving party is entitled to judgment on the law applicable to the established facts.”[14] “Mere assertions of fact in pleadings and memoranda are insufficient for denial of a motion for summary judgment.”[15] We “may affirm the superior court on any basis supported by the record, even if that basis was not considered by the court below or advanced by any party.”[16]

We apply “the deferential ‘reasonable basis’ standard of review … where a question of law implicates [an] agency’s expertise as to complex matters or as to the formulation of fundamental policy.”[17] “[W]here an agency interprets its own regulation … a deferential standard of review properly recognizes that the agency is best able to discern its intent in promulgating the regulation at issue.”[18]

We will not reverse an award of attorney’s fees,[19] a denial of a Rule 60(b) motion for relief from judgment,[20] a decision regarding the admissibility of evidence,[21] or a superior court’s entry of a voluntary dismissal[22] absent an abuse of discretion. “An abuse of discretion exists when we are left with a definite and firm conviction that an error has been made.”[23]

IV. DISCUSSION

These two appeals encompass a total of 12 primary issues. Rude first brings six claims relating to CIRI’s conduct of the election for the board of directors. The next two claims concern CIRI’s refusal to turn over to Rude information about CIRI shareholders. Rude then argues that the superior court erred in granting summary judgment on CIRI’s claims that the New Alliance proxy materials contained material misrepresentations. In his second appeal, Rude argues that the superior court erred by awarding CIRI attorney’s fees. Finally, Rude brings three procedural claims. We address these arguments in turn.

A. Rude’s Counterclaims

1. Most of Rude’s claims are technically moot and reviewable only for the purpose of determining prevailing party status for an award of attorney’s fees.

CIRI argues that nearly all of Rude’s election claims are moot because, owing to numerous delays in this case, the seats up for election in 2008 have since come up for election again. Consequently, Rude’s requested remedy – that CIRI’s proxies for the 2008 election be voided – can no longer provide him any relief.

“A claim is moot where … it has lost its character as a present, live controversy, that is, where a party bringing the action would not be entitled to any relief even if he or she prevailed.”[24] In O’Callaghan v. State, the appellant sought to overturn the 1990 governor’s election and have the State hold a new election.[25] By the time the appeal reached this court, the terms of office of the candidates elected in the 1990 election had already run, and we therefore held that the appeal was moot.[26]

As we have recognized, though, an exception to the mootness doctrine exists through which technically moot claims can be reviewed if there is a strong public interest reason for doing so. In order to determine whether the public interest exception applies, we ask

(1) whether the disputed issues are capable of repetition, (2) whether the mootness doctrine, if applied, may repeatedly circumvent review of the issues and, (3) whether the issues presented are so important to the public interest as to justify overriding the mootness doctrine.[27]

In Rude’s case, because CIRI holds elections every year, his claims are at least capable of repetition. Further, we may assume without deciding that the public interest in open, fully informed corporate democracy is so great as to justify overriding the mootness doctrine. However, in this case the public interest doctrine does not apply because, like in O’Callaghan, “a timely election challenge [was] possible.”[28]

The superior court granted summary judgment to CIRI on most of Rude’s election counterclaims in May 2009. On July 17, 2009, the superior court held a hearing concerning the issues remaining following Judge Christen’s initial summary judgment orders; Rude did not appear at this hearing, nor did he respond to the superior court’s order compelling him to identify remaining counterclaims. Accordingly, CIRI filed a motion to dismiss in October 2009. Only then did Rude respond, but the superior court dismissed Rude’s remaining claims in November 2009. Rude then filed a motion for reconsideration, and the superior court agreed to convert the motion to dismiss into a motion for summary judgment and give the parties time to brief the matter appropriately. On January 21, 2010, the superior court granted summary judgment on Rude’s remaining counterclaims and a final judgment was entered on February 25. On March 26, 2010 – when the candidates elected at the 2008 shareholder meeting still had more than one full year left in their terms – Rude filed a statement of points on appeal. However, Rude filed repeated motions requesting more time, many of which were filed after due dates had run. He ultimately filed his corrected brief on July 13, 2011, ten months after his brief was initially due and more than a month after the 2011 CIRI shareholders meeting. In short, Rude had ample time to contest the election results, and so the second prong of the public interest exception does not apply.[29]

Nonetheless, we have held that “where the outcome of an otherwise moot claim may ‘change[ ] the status of the prevailing party and thus an award of attorneys’ fees,’ we reach the merits of that claim.”[30] Because in this case there has been an entry of judgment against Rude consisting of attorney’s fees and costs, we are bound to consider the merits of Rude’s claims, though the only relief he seeks (aside from setting aside attorney’s fees in his second appeal) is that CIRI’s proxies be voided, his own counted, and the 2008 election results recounted.[31] We review Rude’s claims, however, only to the extent that they may change the prevailing party determination.[32]

2. CIRI was not required to list the names of the New Alliance candidates in its proxy materials.

Rude first argues that the superior court erred by determining that CIRI was not obligated to include the names of the New Alliance candidates in its proxy materials. Rude points to two federal cases from outside Alaska for the proposition that corporations bear the obligation to use their proxy materials to inform shareholders of non-board-endorsed candidates that the board knows to be running.[33] He argues that by failing to disclose the names of the opposition candidates the board gave the impression that its candidates were unopposed and discouraged shareholders from voting.

CIRI responds that Alaska law does not require CIRI to list non-board-recommended candidates in its proxy materials. CIRI also points out that under its election procedures Rude had the opportunity to appear in CIRI’s proxy materials but that Rude declined the offer and “cannot now complain that his candidacy was not included.”

Rude relies primarily on Chambers v. Briggs & Stratton,[34] a case from the Eastern District of Wisconsin, for his claim that CIRI was obligated to include the names of the New Alliance directors in its proxy materials. In Chambers, a corporation omitted the name of a duly nominated candidate for the board of directors from its proxy materials, and a shareholder sued, claiming the omission of the opposition candidate’s information was a material misrepresentation.[35] The court, interpreting the Federal Securities Exchange Act, agreed, finding that “opposition to the election of directors is a material fact” because “there is a substantial likelihood that a reasonable shareholder would regard the existence of opposition to the board’s nominees for director important in deciding how to vote.”[36] CIRI replies that this case is not binding in Alaska and that “Alaska’s proxy regulations specifically address what must be included in board solicitations” and do not require the inclusion of non-board-nominated candidates. The superior court agreed, granting summary judgment to CIRI.

As CIRI and the superior court point out, 3 AAC 08.345, which governs the contents of proxy materials, provides:

(b) The solicitation of proxies on behalf of the board must be preceded or accompanied by a dated, written proxy statement including, but not limited to, the following:

1. if action is to be taken on the election of directors, a description of each nominee of the board who has consented to act if elected and of each director whose term of office will continue after the shareholders’ meeting.

3 AAC 08.335, which governs the contents of proxies, provides:

(c) The proxy must

1. indicate that the proxy is solicited on behalf of the board or, if solicited other than by the board, indicate the identity of the persons on whose behalf the solicitation is made;
2. provide a specifically designated blank space for dating the proxy; and
3. provide a means for the shareholder to specify by boxes a choice between approval or disapproval of each matter or group of related matters identified in the proxy as intended to be acted upon, other than the election of directors.

….

(e) A proxy that provides for the election of directors must

1. set out the names of the nominees for whom the proxy is solicited; and
2. clearly provide one of the following:

(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;

(C) a “ballot” type of selection in which the shareholder is permitted to award votes to selected nominees of the shareholder’s choosing.

The superior court is correct that 3 AAC 08.335, the section governing the proxies themselves, does not require CIRI to include non-board-nominated candidates like Rude in its proxies. Subsection (e)(1) specifically requires that the proxy must “set out the names of the nominees for whom the proxy is solicited. “(Emphasis added.) The rule contemplates that each proxy solicitor will only solicit its own proxies, only requiring a solicitor to include its own candidates. Accordingly, CIRI should not be held to an obligation to solicit proxies on behalf of others.

As to 3 AAC 08.345, the section governing the contents of proxy statements, we addressed this exact issue last year and held that corporations are not required to include in their proxy statements the names of non-board-nominated candidates or non-continuing directors.[37]

Further, as both CIRI and the superior court note, CIRI in fact provided Rude and the other New Alliance candidates an opportunity to be included in the proxy statement, but they chose not to be included. Rude now argues that they should have been included despite this previous refusal. But surely CIRI cannot be required to solicit a candidate’s proxies against that candidate’s will. The superior court did not err by granting summary judgment to CIRI on this point.

3. CIRI’s selection of board-recommended candidates was not improper.

Rude next argues that it was improper for the board to hold “a closed primary election” in which a board-endorsed slate was chosen without shareholder participation. To support his argument he cites to cases concluding that shareholders must be allowed to nominate candidates to oppose board-nominated slates.[38] Here Rude and the New Alliance candidates were able to do just that, running as an independent slate opposed to CIRI’s board-nominated candidates. Rude cites no authority for the proposition that it is impermissible for a corporate board to recommend a slate, even while allowing an opportunity for other candidates to be nominated and to run. Indeed, Alaska’s proxy regulations, noting that a proxy may be solicited “on behalf of the board or … solicited other than by the board,”[39] seem to assume that boards will be soliciting proxies for their recommended candidates. CIRI’s selection of a board-recommended slate was not impermissible.

4. CIRI did not improperly remove Rude from the board of directors.

Rude next argues that CIRI improperly removed him as a director by “taking him off the list of its current directors” in its statement. This, he argues, violated CIRI’s duty to disclose the names of its directors, exceeded CIRI’s powers to punish a sitting director, violated common law rules of disclosure and candor, violated common law proxy rules, and amounted to common law fraud.[40]

The superior court correctly granted summary judgment on these claims. The fundamental flaw in Rude’s contention is that his name was not removed from CIRI’s proxy statement. As discussed above, CIRI was not required to list Rude as a candidate in its proxy statement, and so the omission of his name as a candidate cannot be considered removal.[41] The proxy statement did, though, contain numerous sections in which all current directors were listed, and in each of those sections Rude’s name was included with equal prominence as his fellow directors. In the section discussing directors’ compensation, Rude’s name was listed in alphabetical order. In the section discussing committee assignments, Rude is listed as a member of two committees. In short, Rude’s name was not omitted from CIRI’s proxy materials, and so summary judgment was appropriate on this point.

5. CIRI did not impermissibly solicit proxies before distributing its annual report.

Rude next argues that the superior court erred when it concluded that “[u]nder these circumstances, the law permits CIRI to solicit proxies before issuing its 2007 annual [financial] report.” CIRI’s proxy statement and first proxy were mailed approximately April 11, 2008. About one week later, CIRI sent out a second mailer including a proxy and the corporation’s 2007 annual report. According to Rude, CIRI violated both common law disclosure rules and Alaska proxy regulations when it solicited proxies before informing shareholders about the financial health of the corporation under its current directors. To exacerbate the problem, Rude argues, CIRI “seduc[ed]” shareholders to vote before they had the financial report by offering “Early-Bird Prizes” for the prompt return of proxies.

The superior court rejected this argument, relying on 3 AAC 08.345(a). That regulation provides:

(a) The solicitation of proxies on behalf of the board for an annual meeting must be preceded or accompanied by the annual report for the corporation’s last fiscal year, unless

1. the solicitation is made on behalf of the board before the annual report is available;
2. solicitation is being made at the time in opposition to the board; and
3. the board’s proxy statement includes an undertaking to furnish the annual report to all shareholders being solicited at least 50 days before the date of the annual meeting. (Emphasis added.)

The regulation provides an exception to the general rule that a proxy solicitation cannot precede a financial report. Because there was no dispute as to the second and third prongs of the exception, the superior court focused on the first. Rude argued, as he does now, that the first prong was not satisfied because, although it is undisputed that the financial report was not available when CIRI sent out its first proxy mailing, CIRI had all the essential information it needed to compile the report well before its first mailing. The superior court correctly rejected this argument.

CIRI Vice President Barbara Donatelli filed a sworn affidavit stating that the report was not available when CIRI sent out its first mailing. Rude counters that CIRI received its independent auditor’s report on March 21, 2008, and therefore had enough time to produce its final report before mailing its first proxy solicitation on approximately April 11. But Rude’s bare assertion that CIRI could have completed its financial report within approximately 20 days of the completion of the independent auditor’s report does not create a genuine issue of material fact. Summary judgment was therefore properly granted on this point.

6. CIRI was not required to include information about New Alliance’s proposed special dividend in its proxy materials.

Rude next argues that the trial court erred in granting summary judgment on his claim that CIRI was required to disclose the New Alliance proposal for a special dividend and to allow shareholders a way to vote on it. Several interlocking provisions of the Alaska proxy regulations govern whether board proxy materials must provide shareholders with a way to vote on proposals. As a general matter, 3 AAC 08.335(d) provides that proxies can confer authority on proxy holders to vote on proposals only “if the proxy discloses how the shares represented by the proxy will be voted in each case.” In some cases, though, proxies may grant proxy holders discretionary authority to vote on certain matters. 3 AAC 08.335(f) provides two potentially relevant circumstances in which discretionary authority may be granted.

First, 3 AAC 08.335(f)(1) allows for proxies to confer on their holders discretionary authority to vote with respect to “matters which the persons making the solicitation do not know, a reasonable time before the solicitation, are to be presented at the meeting.” CIRI argues, and the superior court agreed, that this exception applies because “although Rude and the New Alliance had expressed their intention to include the proposal, CIRI could not know whether that plan would indeed be carried out, nor could CIRI know the language that would be used.”

Second, 3 AAC 08.335(f)(4) allows for proxies to confer on their holders discretionary authority to vote with respect to “a proposal omitted from the proxy statement and proxy, if solicited for an annual meeting by participants other than the board.” Relatedly, 3 AAC 08.345(b)(15) requires that proxy statements include, “for each matter which is to be submitted to a vote of the shareholders, other than the election of directors, a description of the proposal and a statement of the vote required for its approval.” CIRI argues that 3 AAC 08.345(b)(15) applies “only to those [proposals] the board itself intends to present for a vote.” (Emphasis in original.) Accordingly, argues CIRI, 3 AAC 08.335(f)(4) “expressly permits solicitation of discretionary authority to vote on non-board proposals.”

We will focus on the second exception.[42] Whether the second exception applies hinges on whether 3 AAC 08.345(b)(15) applies only to board proposals or to all proposals. If the clause “for each matter which is to be submitted to a vote of the shareholders” implicitly means “submitted by the board to a vote of the shareholders,” then 3 AAC 08.335(f)(4) excepts CIRI from having to include the proposal in its proxies. If not, then CIRI was not entitled to discretionary authority on the proposal under this exception.

When interpreting an agency regulation for which an agency has provided its own interpretation, we apply “a deferential standard of review [that] properly recognizes that the agency is best able to discern its intent in promulgating the regulation at issue.”[43] In its motion for partial summary judgment, CIRI attached a 2004 letter from a Division of Banking and Securities examiner explaining that the Division’s interpretation of the regulation was the same as CIRI’s. In that letter, written in response to a complaint that CIRI was refusing to include a proposed floor resolution in its proxy materials, Securities Examiner Ellen Buchanan stated that “[t]he regulations do not require a corporation to include a shareholder’s resolutions in its proxy statement and proxy.” She explained:

The proxy regulations at 3 AAC 08.335(f)(4) state that a proxy may confer discretionary authority to vote on proposals omitted from the proxy statement and proxy materials if solicited for an annual meeting by participants other than the board. We do not agree … that the intent of this section is to allow discretion only if the promoters of it refuse to allow the proposal’s inclusion in the management proxy. We do not find that CIRI’s intent to use discretion to vote on [shareholder] proposals is a violation of the regulations.

Rude proposes no alternative interpretation of the regulation except to assert that his interpretation is correct. He makes no argument that the Division’s interpretation of the regulation lacks a rational basis. Because an agency is best able to interpret the intent of its regulations,[44] Rude’s failure to articulate how the agency’s facially defensible interpretation is incorrect means that the agency interpretation controls. CIRI was not required to include the special dividend proposal in its proxy materials, and summary judgment on this point was therefore appropriate.

7. CIRI’s proxy forms did not improperly contain too few slots for write-in candidates.

Finally, in the last of his election-fairness claims, Rude argues the superior court should have invalidated CIRI’s proxies because they “did not contain five … blanks for write-in candidates, but only one.” According to Rude, this implied that a voter could only vote for one write-in candidate. As the superior court correctly noted, however, Rude provides no authority

to support [his] assertion that a proxy must provide space for shareholders to write in the names of other candidates. Nor does the format misrepresent the options available to the shareholder casting a ballot…. [A] reasonable shareholder would understand [CIRI’s use of the term] ‘ write-in candidates’ to mean that a shareholder is permitted to write-in more than one candidate.

Because the regulations governing proxies do not require spaces for write-in candidates, and because even if such a requirement were inferred, CIRI’s use of the plural “candidates” conveys that more than one name may be written in, the superior court correctly granted summary judgment on this point.

8. Rude’s claim that CIRI impermissibly refused to disclose information to which he was entitled as a director is moot.

Rude’s next two claims argue that CIRI improperly denied him access to corporate information to which he was entitled. In the first claim, Rude argues that he was entitled to the information by virtue of his position as a director. In the second, Rude argues that he was entitled to the information by virtue of his position as a shareholder.

Rude argues that he was denied access to two types of corporate information to which he was absolutely entitled as a director. First, he argues that CIRI wrongfully refused to disclose shareholder email addresses and phone numbers. Second, he argues that CIRI wrongfully refused to disclose “information related to the management of the corporation.” Rude argues that as a director he had an absolute right to this information under AS 10.06.450(d).[45]

CIRI argues, and the superior court found, that Rude’s claim as a director is moot because once he lost his seat as a director he was no longer entitled to this information. Therefore, even if CIRI’s denial was improper, Rude no longer has a right to any relief. Rude concedes mootness but argues that the public interest exception applies to his claims. But, in an unpublished decision, we addressed the public interest exception in this context and determined that it does not apply because claims like this would not “continually evade review.”[46]

Unlike the other claims at issue in this appeal that are technically moot though nonetheless justiciable, Rude’s claim that he was denied corporate information has no bearing on his status as a prevailing party and therefore cannot affect an award of attorney’s fees. Rude is seeking to invalidate CIRI’s proxies. Whether Rude prevails on this information claim has no bearing on whether CIRI’s proxies should have been invalidated, but only on whether Rude was entitled to certain information back when he was a director. The appropriate relief for a denial of corporate information is an injunction,[47] to which, again, Rude is no longer entitled. Therefore, we do not address Rude’s moot claim that he was denied corporate information to which he was entitled as a director.

9. Rude abandoned his argument that CIRI impermissibly refused to disclose information to which he was entitled as a shareholder.

Rude’s second information claim argues that he was denied access to shareholder email addresses to which he was entitled as a shareholder. He argues that AS 10.06.430(b)[48] required CIRI to provide him this information for the “proper purpose” of soliciting proxies. CIRI responds by arguing first that Rude abandoned this argument below, second that no proper shareholder request for information appears in the record, and third that AS 10.06.430(b) does not require a corporation to deliver corporate information to a shareholder. The superior court granted summary judgment on the first two of these bases and also found that Rude never identified a proper purpose for a shareholder inspection.

Rude has abandoned his shareholder claim for information. Once the superior court had granted summary judgment to CIRI on most of Rude’s counterclaims, the superior court gave Rude an opportunity to identify remaining counterclaims. When Rude failed to do so CIRI filed a motion to dismiss the remaining counterclaims. Rude opposed CIRI’s motion and identified four remaining counterclaims, none of which concerned shareholders’ rights to information. The superior court then converted CIRI’s motion to a motion for summary judgment on the four remaining counterclaims exactly as delineated by Rude and gave the parties an opportunity to file briefing. Rude’s failure to identify shareholder information requests as a live issue at this point constitutes an abandonment of his claim.[49] CIRI was therefore entitled to summary judgment on this claim.

For the foregoing reasons, CIRI is entitled to summary judgment on all of Rude’s counterclaims. We now turn to CIRI’s original claims that the New Alliance proxy materials contained material misrepresentations.

B. CIRI’s Claims

The superior court determined that five statements or sets of statements in the New Alliance proxy solicitations were materially misleading as a matter of law. Rude responds that four of these sets of statements are true while the fifth is not misleading because it is aspirational. CIRI urges us to affirm the superior court and further argues that the superior court erred by failing to grant CIRI summary judgment on three other allegedly false statements made by New Alliance.

Alaska law prohibits material misrepresentations in proxy solicitations.[50] Alaska’s proxy regulations define when a statement or series of statements is misleading:

A misrepresentation is a statement that, at the time and under the circumstances in which it is made (1) is false or misleading with respect to a material fact; (2) omits a material fact necessary in order to make a statement made in the solicitation not false or misleading; or (3) omits a material fact necessary to correct a statement, in an earlier communication regarding the solicitation of a proxy for the same meeting or subject matter, which has become false or misleading.[51]

The same regulation provides that a “misrepresentation is material if there is substantial likelihood that a reasonable shareholder would consider it important in deciding how to vote.”[52] Additionally, the regulation provides that

[a] series of statements or omissions that are objectively false or misleading, but which might not be material misrepresentations if considered separately, might be material misrepresentations if there is a substantial likelihood that a reasonable shareholder would consider the series important in deciding how to vote.[53]

Alaska applies the “total mix” standard for determining the materiality of omitted facts.[54] Under this standard, “an omitted fact is material if there is ‘a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the ‘total mix’ of information made available.’“[55] For affirmative misrepresentations accompanied by accurate information, the question is whether the accurate information neutralizes the misleading information.[56] “‘[N]ot every mixture with the true will neutralize the deceptive. If it would take a financial analyst to spot the tension between the one and the other, whatever is misleading will remain materially so, and liability should follow.’ “[57]

Although the issue of materiality is generally one of fact, we have held that the issue “may be resolved as a matter of law on summary judgment ‘ if the established [misrepresentations] are so obviously important to an investor, that reasonable minds cannot differ on the question of materiality.’“[58]

1. The superior court did not err by granting summary judgment to CIRI on New Alliance’s statements concerning CIRI’s liquidation.

The first set of statements the superior court found materially misleading were found in New Alliance’s third mailer:

Who is liquidating CIRI? The New Alliance believes CIRI is being liquidated by management. As of May 2006: CIRI sold total ANCSA land entitlements of $336,344,180. Included in this amount was the sale of $275,141,211 worth of federal surplus properties.

The CIRI May 1996 newsletter listed CIRI’s original ANCSA land entitlement at 1,301,515 acres of surface and 2,366,685 acres of subsurface estate. CIRI traded 602,399 acres of surface and subsurface estate for our federal surplus properties.

Page 7 of the CIRI 2007 Annual Report lists CIRI’s current ANCSA land entitlement at approximately 600,000 acres of surface and 1,300,000 acres of subsurface estate. Our land entitlements have been reduced by approximately 700,000 acres of surface and 1,000,000 acres of subsurface estate. (Emphases in original.)

The basis for the superior court’s conclusion that these statements, taken together, were misleading was an affidavit filed by CIRI’s Director of Land and Resources Kim Cunningham. That affidavit stated, in part:

Since CIRI’s inception, in no way has CIRI “sold” or “liquidated” anywhere close to 700,000 acres of surface or 1,000,000 acres of subsurface lands that CIRI received as [its] ANCSA entitlement. The original ANCSA lands made available to CIRI for selection within its region were of little value because they consisted largely of “mountain tops and glaciers.” Through a comprehensive settlement with the federal government, followed by a series of land exchanges, CIRI agreed to forego certain of its original entitlement acreage in exchange for potentially more valuable land of a lesser acreage outside of the CIRI region. As stated in the 1996 Annual Report at 21, the land CIRI agreed to accept for its ANCSA entitlement consisted of approximately 699,000 acres of surface estate and 1,764,000 acres of subsurface estate. To date, CIRI has received over 90% of its entitlement, as restructured….

… CIRI’s business records [attached to the affidavit] reflect that as of April 2, 2008, CIRI owned 606,057 acres of surface estate, and had sold only 11,755 acres of surface estate, for a total sales price of $306,139,284…. CIRI owned 1,559,033 acres of subsurface estate, and had sold only 118,763 acres for a total sales price of $31,105,256….

CIRI still owns over 90% of the acreage it received under ANCSA….

In granting summary judgment, the superior court found that asking “who is liquidating CIRI” gave the false impression that its assets were being liquidated or sold off. The superior court rejected the defendants’ argument that they had a good-faith basis for believing that CIRI was liquidating large landholdings.

On appeal, Rude does not argue that he had a good-faith belief that the New Alliance statements were true, but rather that they are true. Rude argues that “[t]he New Alliance’s third mailer did not state or imply that CIRI had sold or liquidated 700,000 acres of surface estate or 1,000,000 acres of subsurface estate, only that CIRI’s entitlement to this acreage had been traded away for government surplus property, much of which was sold between 1997 and the present.” But taken together, the three paragraphs clearly suggest the former. By titling this section of the mailer “Who is liquidating CIRI?” and claiming that CIRI had disposed of vast estates, New Alliance suggested that major assets are being sold as part of a total dismantling of CIRI. This is an affirmative misrepresentation. It is material because, as the superior court noted, “a reasonable shareholder would of course consider it important when deciding how to vote if he/she understood that 700,000 acres of surface estate and 1,000,000 acres of subsurface estate had been liquidated without explanation.”

By mentioning the $336 million in land sales, along with the reductions in CIRI’s entitlement, without mentioning that the former was for the sale of only 12,000 acres of surface estate and 119,000 acres of subsurface estate and that the latter was as a result of swapping less valuable (though larger) acreage for more valuable (though smaller) acreage, the mailer suggests that more than half of CIRI’s original ANCSA entitlement has been sold. The omission of any explanation as to the sales and land swap is material because “there is ‘a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the ‘total mix’ of information made available.’“[59] Had a shareholder known that the reductions in landholdings came as part of a swap for more valuable holdings, and that the $366 million came from selling only a small part of CIRI’s estate, this would have significantly altered the total mix of information. CIRI was therefore entitled to summary judgment on its claim that the New Alliance statements concerning CIRI’s “liquidation” are misleading.

2. The superior court did not err by granting summary judgment to CIRI on New Alliance’s statements concerning shareholder rights.

The superior court also found materially misleading the following statements from New Alliance’s third mailer:

Shareholder participation. Section 2(b) of ANCSA says “Natives shall have maximum participation in decisions affecting their rights and property.”

We believe shareholder participation is lacking in our corporation…. Shareholders do not get to vote on: the sale of large ANCSA land and natural resource properties; large cash donations; the granting of CIRI owned stock to senior executives; political donations; large payments made to lobbyists and consultants; nor do they get to vote on legislation that would affect their rights or property. We want to change this! (Emphases in original.)

The superior court concluded that “[t]he overall message communicated by both statements, read together, is that CIRI is depriving shareholders of legal rights and that shareholders are entitled to vote on operational decisions.” The court noted that Section 2(b) of ANCSA was a congressional declaration as to how the settlement of Native claims should be accomplished, not a law concerning the day-to-day operations of ANCSA corporations.[60] Instead, the court noted, paraphrasing AS 10.06.450(a),[61] that “under Alaska law, the board of directors, not shareholders[,] has the right to make both day-to-day and long-term management and operational decisions.” The superior court rejected New Alliance’s argument that the statement only suggested that the law should be changed, saying that it was “not at all clear from the statement … that [New Alliance] was suggesting a change of law.” Finally, the superior court noted that in 1997, Superior Court Judge Peter A. Michalski had ordered Rude to issue a correction to his proxy statement saying, among other things, “Under Alaska law, the Board of Directors, not the shareholders, is responsible for managing the business and affairs of the corporation. Ordinary business decisions, therefore, are not appropriate matters for a shareholder vote.”

Rude argues on appeal that these statements were not misleading because they were “merely aspirational.” “The New Alliance,” he argues, “is stating that if shareholders elect a majority of New Alliance directors, the directors will consult with shareholders and seek advisory votes on certain large transactions.” But the New Alliance materials give the impression that the supposed lack of shareholder participation in CIRI decisions is a violation of Section 2(b) of ANCSA. Rude’s after-the-fact explanation – that New Alliance was merely proposing advisory votes – is unpersuasive because New Alliance could easily have said that in the mailer, but chose not to.[62] Instead, it left shareholders with the impression that their rights were being violated by the CIRI board. Writing proxy materials is not and should not be an exercise in how much can be insinuated about the other side without outright lying. As the superior court correctly found, this misrepresentation was material because a reasonable shareholder would consider the fact that the CIRI board was denying her rights important in considering how to vote. Summary judgment was therefore appropriate as to these statements.

3. The superior court did not err by granting summary judgment to CIRI on New Alliance’s statements that “a hardcore minority of 6 directors” controlled CIRI.

Third, the superior court found that it was a material misrepresentation for New Alliance to say on its website that “never again will a hardcore minority of 6 directors control our corporation.” The superior court rejected New Alliance’s argument that it was referring to the power of six directors to select an executive committee that conducted much of CIRI’s business. New Alliance omitted this explanation from the statement on its website. As a result, the total mix of available information suggested improper corporate governance.[63] The superior court concluded “[a] minimum of eight of the fifteen directors is required to command a majority” and that the New Alliance statement that a six-member minority was controlling the corporation was therefore false. The superior court further found that the statement suggested that a minority of directors is “somehow improperly controlling the corporation,” thus causing a reasonable shareholder to consider the statement important in deciding how to vote. It is significant that this statement dovetails with New Alliance’s misrepresentation that shareholders are being improperly deprived of their rights to participate in corporate governance. Since a reasonable shareholder would consider New Alliance’s series of statements concerning improper corporate governance important in deciding how to vote, we conclude summary judgment was appropriate as to this statement.

4. The superior court did not err by granting summary judgment to CIRI on New Alliance’s statements.

These three misrepresentations permeated New Alliance’s proxy solicitation and together gave the materially misleading impression that the CIRI board was improperly depriving shareholders of the benefits of corporation ownership. Because these three misrepresentations, taken together, are sufficient to justify the superior court’s decision to void the New Alliance proxies, we need go no further. Addressing further alleged misrepresentations can have no bearing on CIRI’s status as the prevailing party.[64] We affirm the superior court’s grant of summary judgment to CIRI and the court’s decision to void the New Alliance proxies.

C. Rude’s Second Appeal

Rude’s second appeal in this case challenges the superior court’s fee award and three procedural matters. First, Rude argues that the attorney’s fee award to CIRI should be reduced to zero based on various alleged forms of misconduct committed by CIRI. Second, Rude argues that the court improperly refused to admit the exhibits that Rude attached to his Rule 60(b) motion. Third, Rude argues that the superior court wrongly denied his Rule 60(b) motion for relief from judgment on procedural grounds and should have reached the substance of his argument. Finally, Rude argues that the court erred in dismissing New Alliance as a party. None of these arguments has merit, and we affirm the superior court on all points.

1. The superior court did not abuse its discretion in awarding attorney’s fees to CIRI.

Following summary judgment on all of CIRI’s claims and Rude’s counterclaims, the superior court ordered Rude to pay CIRI attorney’s fees totaling $43,773.80 and costs totaling $5,441.14.[65] Rude challenges this award on several bases.

Alaska Civil Rule 82(b)(2) provides that in cases without money judgments, the superior court “shall award the prevailing party in a case resolved without trial 20 percent of its actual attorney’s fees which were necessarily incurred.” Here CIRI submitted evidence showing that it had spent $223,530 in litigating the claims and counterclaims against Rude, and the superior court accordingly awarded attorney’s fees of slightly below 20%. Rude does not challenge that this was the proper presumptive amount under Rule 82. Instead, he argues that the superior court abused its discretion [66] in failing to vary the presumptive fee award according to the fee variance factors of Rule 82(b)(3).[67]

First, he argues that CIRI’s fee award should be reduced because CIRI acted in bad faith by: (1) refusing to disclose shareholder email addresses to the New Alliance candidates;[68] (2) failing to include the New Alliance candidates in its proxy materials; (3) soliciting proxies before it sent out its annual report; (4) failing to include the New Alliance dividend proposal in its proxy materials; (5) improperly nominating a slate of board-endorsed candidates; (6) improperly placing only one line for write-in candidates on its proxies; (7) paying the campaign expenses of board-nominated candidates but not the New Alliance candidates; and (8) removing Rude from the board by failing to list his name in its proxy materials. But with the exception of the claim about election expenses, these are just a rehash of Rude’s counterclaims. Rude’s argument is basically that the very conduct for which CIRI is not liable should nonetheless reduce the attorney’s fees he owes. Because CIRI is entitled to judgment on Rude’s election-fairness claims, it is also entitled to attorney’s fees on those claims.[69],[70]

Further, with the exception of the claim that CIRI refused to disclose shareholder email addresses, Rude explicitly stated in his opposition to CIRI’s motion for attorney’s fees that neither party had engaged in vexatious or bad-faith conduct. He has therefore waived this argument.[71]

Rude’s second argument, relying on Rule 82(b)(3)(I),[72] is that “[t]he fee award granted by the trial court is so onerous … that it would deter similarly situated litigants from the voluntary use of the courts to remedy any future misconduct of ANCSA corporations.” CIRI argues that subsection I does not apply to Rude because he did not make “voluntary use of the courts,” but was instead sued by CIRI.[73] As CIRI seems to recognize, though, this rule does apply to Rude’s counterclaims. As to those claims, Rude argues that “rational apathy” discourages shareholders from bringing potentially costly claims against corporations in which they can expect little individual benefit (though systemic benefits may be great). As CIRI points out, though, here “Rude’s counterclaims were motivated by private concerns, particularly his personal desire to seek election to the CIRI board of directors.” Given that Rude had a strong personal stake in the outcome of his counterclaims, the superior court did not abuse its discretion in declining to vary from the Rule 82 fee schedule.

Relying on Rule 82(b)(3)(J), Rude next argues that “[t]his [c]ourt should vacate CIRI’s award of costs and attorney fees because CIRI’s decision to bring this case was influenced by management’s desire to discourage actions by other shareholders to reform CIRI.” As CIRI notes, “[n]o factual or legal basis exists for this assertion,” and Rude cites to no evidence in this portion of his brief. Given the lack of any support for Rude’s assertion, it was not an abuse of discretion for the superior court to decline to vary the fee award.

Finally, Rude argues that the superior court should have applied “the equitable doctrine of common benefit” to “protect[ ] a lone shareholder from bearing the burden of litigation that is intended to benefit many shareholders, to promote corporate suffrage, and to protect the corporate democracy.” As discussed above, though, Rude’s private interest in bringing his counterclaims was substantial. The superior court was therefore acting within its discretion when it declined to vary the fee award.

Because Rude has not shown that the superior court abused its discretion in declining to vary from Rules 82’s presumptive fee awards, we affirm the superior court’s fee award.

2. The superior court did not abuse its discretion by striking from the record exhibits filed with Rude’s Rule 60(b) motion.

Rude next argues that the superior court abused its discretion in refusing to admit 33 exhibits attached to his Rule 60(b) motion. Rude’s motion for relief from judgment, filed after summary judgment had been granted on all of the claims and counterclaims and after Rude had already filed a notice of appeal, contained 33 new exhibits. CIRI then filed a motion to strike the exhibits on the grounds that they were irrelevant to Rude’s Rule 60 motion, that they were filed much too late and were “a blatant attempt to inappropriately supplement the record on appeal,” and that they were not authenticated. The superior court granted CIRI’s motion for the reasons stated therein.

On appeal, Rude argues that the motion was brought as a Rule 12(f) motion to strike and that Rule 12(f) empowers courts to strike material from pleadings only, and not exhibits. He argues that even if Rule 12(f) were applicable, the exhibits in question “were not redundant, immaterial, impertinent, or scandalous” because they were “CIRI’s own business records.” He further argues that the superior court erred in finding that the evidence was not relevant under Alaska Evidence Rules 401 and 403. He finally argues that the superior court erred in finding that the exhibits were not admissible because they were not authenticated.

The superior court did not abuse its discretion in refusing to admit the exhibits. As the superior court found, Rude’s new exhibits were filed after summary judgment had already been granted on all claims and those judgments had already been appealed. At that point, Rude’s delay in filing the exhibits could fairly be called undue, and admitting the exhibits – i.e., giving Rude an opportunity to supplement the appellate record after the case had already terminated – would have unfairly prejudiced CIRI.[74] Notably, Rude did not move for relief from judgment under Civil Rule 60(b)(2). That rule provides for relief in cases of “newly discovered evidence which by due diligence could not have been discovered in time to move for a new trial under Rule 59(b).” However, even had Rude argued under this rule, there is nothing in the record to suggest that the 33 new exhibits were “newly discovered evidence which by due diligence could not have been discovered” earlier. Even under Rule 60(b)(2), then, it appears the exhibits would have been properly excluded.

3. The superior court did not abuse its discretion by denying Rude’s Rule 60(b) motion.

Rude next argues that the superior court abused its discretion in denying his Rule 60(b) motion for relief from judgment.[75] Rude’s arguments in his motion were essentially identical to those he made in opposing summary judgment. Because the superior court did not err in granting summary judgment to CIRI on all claims and counterclaims, its denial of the Rule 60(b) motion was not a reversible error.[76]

4. The superior court did not abuse its discretion by entering the stipulated order dismissing New Alliance as a party.

Finally, Rude argues that the superior court erred by entering a stipulated order dismissing New Alliance as a party. On July 6, 2009, following the superior court’s two main summary judgment rulings, the superior court entered a stipulation and order dismissing defendants Anagick, Kiana, Thomas, and New Alliance as parties. The stipulation was signed by CIRI’s attorney, Thomas’s attorney, Chris Kiana, and Ella Anagick, who four days before had filed an entry of appearance as attorney on behalf of New Alliance.[77] The stipulation was not signed by Rude’s attorney, Fred Triem, who had filed an entry of appearance on behalf of New Alliance in June 2008.

Rude argues that this stipulation was “not effective” with respect to New Alliance because Triem was the attorney of record for New Alliance, and he “has never withdrawn or been substituted.” Alaska Civil Rule 81(c), on which Rude relies, provides:

1. An attorney who files a pleading or appears in a court proceeding on behalf of a party shall be deemed to have entered an appearance for all purposes in that case unless the attorney has filed and served a limited entry of appearance under (d) of this rule.
2. Except as otherwise ordered by the court, or except as provided in Rule 81(d) and 81(e)(1)(D), a party who has appeared by an attorney may not thereafter appear or act in the party’s own behalf in any action or proceeding, unless order of substitution shall have been made by the court after notice to such attorney.

According to Rude, this rule required a substitution of counsel before Anagick could act on behalf of New Alliance.

CIRI responds that neither Rude nor Triem objected to the dismissal below, nor to Anagick’s entry of appearance as counsel for New Alliance, and that this point is therefore waived. CIRI is correct. “A party may not raise an issue for the first time on appeal.”[78] To be sure, as the court of appeals has recognized in cases in which represented parties try to file pro se pleadings, allowing a party to have multiple representatives who might be working at cross-purposes “could cause considerable confusion.”[79] But in situations such as these, the superior court has “the authority” to require parties to consolidate their representation; there is no basis for requiring the court to do so.[80] Further, even in situations in which a late entry of appearance may undermine the ability of a precedent attorney to pursue her client’s claim effectively, it is up to the party or the aggrieved attorney to raise an objection, at the latest, when the conflict arises. Here, Rude and Triem failed to object and have thus forfeited any objection. The superior court was therefore acting within its discretion to enter the stipulated order to which no one had objected.[81]

V. CONCLUSION

For the foregoing reasons, we AFFIRM the superior court.

I. Background

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

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

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

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

II. Standard

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

III. Discussion

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

IV. Conclusion

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

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

I. INTRODUCTION

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

II. FACTS AND PROCEEDINGS

A. Facts

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

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

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

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

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

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

B. Proceedings

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

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

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

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

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

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

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

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

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

III. STANDARD OF REVIEW

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

IV. DISCUSSION

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

V. CONCLUSION

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

I. INTRODUCTION

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

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

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

II. FACTS AND PROCEEDINGS

A. The Parties

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

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

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

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

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

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

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

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

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

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

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

D. The Corporation Releases Some Information.

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

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

E. Pre-Trial Proceedings

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

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

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

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

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

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

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

F. Trial Proceedings

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

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

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

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

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

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

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

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

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

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

Pederson appeals.

III. STANDARD OF REVIEW

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

IV. DISCUSSION

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

V. CONCLUSION

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