Kenai Peninsula Borough v. Cook Inlet Region

The Alaska Native Claims Settlement Act (ANCSA), 43 U.S.C. §§ 1601-1628 (1982), extinguished all claims of the Native people of Alaska based on aboriginal title in exchange for 962.5 million dollars and 44 million acres of public land. See United States v. Atlantic Richfield Co., 612 F.2d 1132, 1134 (9th Cir. 1980). The act authorized the creation of 13 regional and over 200 village corporations to receive this money and land.

In enacting ANCSA, Congress declared as a policy that “the settlement should be accomplished . . . without adding to the categories of properties and institutions enjoying special tax privileges . . . .” 43 U.S.C. § 1601(b). Congress did, however, provide for an exemption from real property taxation for lands conveyed under the act. The exemption was limited in time to 20 years, and in content to lands “which are not developed or leased to third parties.” 43 U.S.C. § 1620(d)(1). This case concerns the meaning of the term “developed” in the act.

PROCEDURAL HISTORY

A. Salamatof Native Association, Inc.

Salamatof Native Association, Inc. (Salamatof) is a village corporation which received land under ANCSA. At issue in this appeal are the tax years 1981 through 1985 and 161 tax parcels. Salamatof paid real property taxes to the Kenai Peninsula Borough (borough) on all parcels and appealed to the borough assessor. The assessor found that taxes for 1981 through 1983 were not protested in a timely manner and denied the appeal as to all parcels for those years. He found that taxes for 1984 and subsequent years were protested on time. On the merits, the assessor found that a number of parcels were exempt. However, he denied exemptions to some of the parcels presently before us on the grounds that the parcels were developed. As to these, the assessor stated, in relevant part:

a. That these parcels are within a platted subdivision and are capable of use for gainful and productive purposes as they are now, they are presently offered for sale; and

b. These parcels were created by subdivision plat. A subdivision plat is more than just mere surveying, and creates new legally defined parcels and rights regarding sale of the resulting parcels. A subdivision constitutes a purposeful modification of the land from its original state and in this case, makes it capable of a present productive gainful use.

Salamatof took a timely appeal of this decision to the superior court. The parties by stipulation added parcels on which the assessor made no ruling. In the superior court this case was  consolidated with the appeal of Cook Inlet Region, Inc.[1]

B. Appeal of Cook Inlet Region, Inc.

Cook Inlet Region, Inc. (CIRI) is a regional corporation under ANCSA and an Alaska business corporation. The tax years in question are 1981 through 1986 involving some 67 parcels. CIRI paid its taxes and appealed to the borough assessor. On January 27 and June 4, 1986, hearings were held before the assessor. The assessor ruled that a number of parcels were exempt, but denied exemptions as to many others. In general, the grounds for denial were that the parcels are considered developed as they are surveyed or subdivided lots capable of gainful and productive present use and need no further modification to be marketable. From this decision CIRI appealed to the superior court.

COURSE OF PROCEEDINGS IN THE SUPERIOR COURT

After procedural skirmishes and a substantial period of delay by the borough in filing its appellee’s brief, the trial court entered a written decision ruling that all the parcels, with one exception, were “clearly undeveloped” and thus tax exempt. The excepted parcel, the so-called Homer radio station property owned by CIRI, was remanded to the assessor for further proceedings. Final judgments in favor of CIRI and Salamatof were entered pursuant to Civil Rule 54(b) as to all of the parcels except the parcel containing the radio station.

CIRI moved for full attorney’s fees and costs of $30,761.48 and for an award of sanctions against the borough of $2,500. Salamatof made a similar motion, requesting actual attorney’s fees of $64,258, actual costs of $4,088.92, and sanctions of $2,400.

The borough asked for and received an extension in which to oppose these motions. When this period ended it requested a further extension. While this request was pending the trial court awarded CIRI and Salamatof what they had asked for in actual attorney’s fees, costs, and sanctions, noting that no opposition had been filed.

On appeal to this court, the borough challenges the superior court’s ruling that CIRI’s and Salamatof’s property is exempt and the award of actual attorney’s fees and sanctions.[2]

FAILURE TO ASSERT AN EXEMPTION

As a threshold matter, the borough argues that neither CIRI nor Salamatof asserted that its property was exempt in a timely manner for the tax years 1981-1985. The borough relies on section 2 of Kenai Peninsula Borough (KPB) Ordinance 5.12.055, passed in 1985, which sets forth the procedure for appealing tax assessments to the borough assessor. Section 2 provides that appellants who have claimed or asserted that properties are exempt prior to the time taxes were due for that year but whose properties have been assessed by the Borough assessing staff for the 1985 assessment year and all prior assessment years, have until December 31, 1985 to appeal such assessments pursuant to the procedures established under Section 1 of the ordinance; except that no appeal right under this ordinance shall exist if the property claimed to be exempt has been the subject of a final determination of taxes due through a tax foreclosure or other legal action.

The borough argues that the taxpayers under this section were required to have asserted their exemptions prior to the yearly tax due date of August 15, and that they did not do so. The borough assessor found that Salamatof did not protest the taxation of its parcels in a timely manner for the tax years 1981-1983. The superior court reversed the assessor’s ruling on this point, stating that the ordinance “was enacted especially to deal with the taxpayers’ complaints.”

The trial court’s conclusion concerning the purpose of the ordinance is warranted in part. The ordinance was designed to accommodate the appeals of Native corporations for years prior to 1985. However, the ordinance requires as a condition of appeal that an appellant “have claimed or asserted” an exemption “prior to the time taxes were due for that year.” This condition cannot be read out of the ordinance.

There was substantial evidence to support the assessor’s ruling that Salamatof failed to object to taxation of its property in a timely fashion for the tax years 1981 through 1983. The first assertion of immunity appearing of record was made January 23, 1984, when Salamatof made a late payment of its 1983 taxes under protest. Accordingly, the assessor’s ruling should have been affirmed.[3]

Although the ordinance on which the borough relies was not enacted until 1985, statutory procedures existed prior to that time for obtaining a refund of taxes paid under protest. AS 29.45.500. Such actions were barred if not brought within one year after the due date of the tax. AS 29.45.500(b). In addition, a statutory right of appeal from assessments existed prior to the ordinance under AS 29.45.190 and AS 29.45.200(c). These, however, had to be exercised within 30 days after the date of mailing of the notice of assessment. The deadlines for both of these methods had passed by the time Salamatof first initiated action as to the tax years 1981 through 1983.

The assessor found that Salamatof’s protests were on time for the years 1984 and 1985. The ordinance only requires that taxpayers claim or assert exemptions. KPB Ordinance § 5.12.055(2). No particular form of claim or assertion is required. Since it appears that Salamatof began protesting taxation beginning January 23, 1984, prior to the time taxes were due for 1984, we conclude that the assessor’s decision that Salamatof’s protest for 1984 and 1985 were timely under the ordinance is supportable.

By the same standard, CIRI’s protests are timely for all tax years in question as it had been protesting taxation since 1981.

We thus conclude that the borough’s argument concerning the timeliness of Salamatof’s appeal for 1981 through 1983 is correct and that all of Salamatof’s property involved in this case was taxable for those years. The borough’s timeliness arguments concerning Salamatof’s property for 1984 and 1985 and CIRI’s property for all of the tax years lack merit.

STATUTORY FRAMEWORK FOR THE CLAIMS OF EXEMPTION

There are four statutes which are relevant to the exemption issue. The first is ANCSA, enacted by Congress in 1971 to extinguish Alaska Natives’ claims to aboriginal title and to grant compensation for those claims. As noted, section 21(d) of ANCSA (43 U.S.C. § 1620(d)) provided that lands conveyed under ANCSA would be tax exempt for 20 years except for developed lands or lands leased to third parties.[4]

The legislative history of section 21(d) of ANCSA has been described as “sparse.” Price, Purtich and Gerber, The Tax Exemption of Native Lands Under Section 21(d) of the Alaska Native Claims Settlement Act, 6 U.C.L.A. Alaska L. Rev. 1, 3 (1976) (hereafter “Price”). Price’s explanation of the purpose the exemption is as follows:

Section 21(d), as part of the Alaska Native Claims Settlement Act, is most clearly a provision implementing the policy of gradual adjustment to the economic mainstream. The twenty year moratorium on taxation of undeveloped and unleased land serves as a period during which the Natives can experiment in financial and real estate transactions and achieve managerial capability, without fear of immediate tax burdens arising from the ownership of vast tracts of undeveloped land. Furthermore, the tax moratorium permits the Natives to pursue a traditional subsistence lifestyle, at least temporarily, without the need to exploit hunting grounds in order to raise revenue for taxation. An exemption is also important because of the danger of foreclosure for nonpayment and the possibility of rapid movement of land ownership from Native to non-Natives.

Price at 6.

While this is an explanation for the moratorium on taxation, it does not explain the exception to the moratorium for developed or leased land. Price describes the draftsmen of ANCSA as “generally hostile to [tax] exemptions.” Id. at 5. However, “there is evidence that the moratorium on taxation was a bargained-for compensation and part of the liquidation of the Native claim.” Id. at 6.

The influential report of the Federal Field Committee for Development Planning in Alaska, Alaska Natives and the Land (U.S. Government, Anchorage, 1968) discusses the tax exemption problem as follows:

Tax exemptions could have significant fiscal implications for the state and local government. The real estate exemption of S.B. 3586, for instance, keeps all lands granted off the property tax rolls whether they are “in fee or in trust.” This provision applies as well to any minerals associated with the land grant which could otherwise be made subject to ad valorem levies where tax bodies existed. Conceivably, these sums might amount to considerable amounts of public receipts foregone. Some caution is appropriate here, however, in that too early and too much land taxation can result in confiscation of the land, which result would clearly be counter-productive to the policy resolution intended.

The problem here seems to be to distinguish among the different purposes for which land might be granted. In the case of homesites, fishing camps, and the like, or of lands granted to protect subsistence activities, maximum insurance is required against confiscation because of the owner’s inability to pay taxes. In the case of grants of commercially valuable land for income purposes, however, the point is to get them into a productive, income-earning position and, indeed, to get them on the tax rolls. To the extent that these lands are in fact capable of producing income, there is no obvious justification for keeping them off the tax rolls simply because they happen to be owned by Natives or Native groups.

Id. at 531 (emphasis in original).

From the committee standpoint at least, land capable of producing income which was selected for its income producing potential should be taxable in fairness to the state and local governments. This sentiment seems to have been carried forward to the final enactment of ANCSA, as illustrated by the Congressional declaration that there be no addition to the categories of property enjoying special tax privileges, 43 U.S.C. § 1601(b), and in the provision of section 21(d) of ANCSA itself, providing that developed or leased property is immediately taxable.

The next act of importance to this case is the Alaska National Interest Lands Conservation Act of 1980, P.L. 96-487 (ANILCA). ANILCA, so far as relevant here, amended section 21(d) to begin the running of the 20-year exemption period “from the vesting of title pursuant to the Alaska National Interest Lands Conservation Act or the date of issuance of an interim conveyance or patent, whichever is earlier . . . .”

ANILCA also created the Alaska Land Bank program. 43 U.S.C. § 1636. Under this program, private land owners, including Native corporations, could make agreements with the Secretary of the Interior so that their lands would be managed in a manner compatible with the management plan for adjoining federal lands. As to lands owned by Native corporations which were included in such agreements, ANILCA provided that there would be permanent immunity from state and local property taxes. 43 U.S.C. § 1636(d).

In addition, ANILCA expanded the tax exemption to reach property used “solely for the purposes of exploration” and added language to the first proviso of section 21(d) of ANCSA which was aimed at re-establishing tax exemption when property was no longer “leased or being developed.”[5]

In 1983 the Alaska Legislature passed Senate Bill 260 (effective January 1984), which added property exempt under ANCSA to the list of property exempt from taxation. AS 29.45.030(a)(7). The legislature then defined the meaning of the term “developed,” among other terms used in ANCSA, “unless superseded by applicable federal law” as follows:

“developed” means a purposeful modification of the property from its original state that effectuates a condition of gainful and productive present use without further substantial modification; surveying, construction of roads, providing utilities or similar actions normally considered to be component parts of the development process, but which do not create the condition described in this paragraph, do not constitute a developed state within the meaning of this paragraph; developed property, in order to remove the exemption, must be developed for purposes other than exploration, and be limited to the smallest practicable tract of the property actually used in the developed state;[6]

The last act of relevance is Public Law 100-241, 101 Stat. 1806, the Alaska Native Claims Settlement Act Amendments of 1987. This act extended the Alaska Land Bank tax exemption to all lands conveyed under ANCSA, regardless of whether they are subject to a Land Bank Agreement, “so long as such land and interests are not developed or leased or sold to third parties . . . .” 43 U.S.C. § 1636(d)(1)(A)(ii). Also, the act defines “developed” in terms which at the outset are substantially identical to the terms used in the 1983 state statute, but which go on to specify that land which is subdivided under an approved and recorded subdivision plat is “developed”.[7] 43 U.S.C. 1636(d)(2)(B)(iii).

The House explanatory statement to Public Law 100-241 discusses the term “developed” at length. The statement makes clear Congress’ intent that, whatever else the word “developed” might mean, it encompasses lots in an approved and recorded subdivision:

Land in Alaska is subdivided by the State or by local platting authorities. Action by the appropriate platting authority enables development of the subdivided property. Regardless of whether a tract of land has been physically modified from its original state, the tract is ‘developed’ from the date an approved subdivision plat is properly recorded by the landowner or his or its authorized agent.

House Explanatory Statement, 100th Cong., 1st Sess. § 11, reprinted in 1987 U.S. Code Cong. & Admin. News 3299, 3311.

(B) State and local property taxes specified in subparagraph (A) of this paragraph (together with interest at the rate of 5 per centum per annum commencing on the date of recordation of the subdivision plat) shall be paid in equal semi-annual installments over a two-year period commencing on the date six months after the date of recordation of the subdivision plat.

(C) At least thirty days prior to final approval of a plat of the type described in subparagraph (A), the government entity with jurisdiction over the plat shall notify the submitting individual, corporation, or trust of the estimated tax liability that would be incurred as a result of the recordation of the plat at the time of final approval 

….

(6) Savings.

….

(B) Enactment of this subsection shall not affect any real property tax claim in litigation on the date of enactment [February 3, 1988].

DISCUSSION OF THE MERITS

The borough argues that there is a generally accepted meaning of the term “developed” in the context of land. This meaning is, “converted into an area suitable for residential or business uses.” The borough contends that this definition encompasses land which has been platted and is ready for sale. The borough argues that Congress intended that the term “developed” would mean this in section 21(d) of ANCSA. Further, the borough argues that if the state law definition of “developed” exempts property that would not be exempt under ANCSA, state law is unconstitutional because non-Native corporation owners of property identical in character and use are not afforded the same tax exemption.

The appellees argue that in order to be “developed” under ANCSA, property must be actually productive of income rather than merely potentially productive. Appellees contend that AS 29.45.030 is consistent with ANCSA. Alternatively, they argue that there is no common or ordinary meaning of the term “developed,” that it is ambiguous, and that therefore the rule of construction that in Indian law all ambiguities must be resolved in favor of Indians should control this case and requires a construction which exempts any parcel which had not been purposefully modified and is not presently economically productive.

The meaning of the term “developed” under ANCSA is a question of federal law. Consequently, the primary consideration in determining meaning is the intent of Congress. Although it is well established that ambiguities in ANCSA are to be resolved favorably to Natives, Alaska Public Easement Defense Fund v. Andrus, 435 F. Supp. 664, 670-71 (D. Alaska 1977); People of South Naknek v. Bristol Bay Borough, 466 F. Supp. 870, 873 (D. Alaska 1979), if congressional intent is clear, we must defer to it. Hakala v. Atxam Corp., 753 P.2d 1144, 1147 (Alaska 1988).

One indication of congressional intent is the ordinary meaning of the words used in the statute. In the context of raw land,[8] the common meaning of “developed” includes subdivided property which is ready for sale. Webster’s Third New International Dictionary of the English Language, Unabridged (1968), defines “develop” in a land context as follows:

to make actually available or usable (something previously only potentially available or usable) . . . : as (1): to convert (as raw land) into an area suitable for residential or business purposes they approximately equal to several large tracts on the edge of town; also: to alter raw land into (an area suitable for building) the subdivisions that they approximately equal to were soon built up . . . .

Cases dealing with the term “developed” in the context of land confirm that “develop” connotes conversion into an area suitable for use or sale. Winkelman v. City of Tiburon, 32 Cal.App.3d 834, 108 Cal.Rptr. 415, 421 (Cal. App. 1973) (“The term ‘developed’ connotes the act of converting a tract of land into an area suitable for residential or business uses.”); Muirhead v. Pilot Properties, Inc., 258 So.2d 232, 233 (Miss. 1972) (same holding); Prince George’s County v. Equitable Trust Co., 44 Md.App. 272, 408 A.2d 737, 742 (Md. Ct. Spec. App. 1979) (“Develop [is defined as] the conversion of raw land into an area suitable for residential or business uses.”)(Quoting Webster’s New International Dictionary, (2d Ed. 1959)); Best Building Co. v. Sikes, 394 S.W.2d 57, 63 (Tex. App. 1965) (court approved trial court finding based in part on extrinsic evidence that “developed” included subdividing, building streets, and installing utilities).

The appellees’ position that in order to be developed property must actually be producing income is not supported by any generally accepted definition of the term. It would mean, for example, that a vacant office building located on a city lot is undeveloped. Since having an income producing character is not a necessary component of the word “developed” in ordinary usage, we reject the appellees’ interpretation.

At the hearing before the assessor, CIRI advocated a different definition of developed. CIRI took the view that a small tract of land was developed if profits from its sale would be maximized without further physical or legal alteration.

CIRI’s position was illustrated by Steve Planchon, its land development manager:

We do have . . . nine, ten properties . . . that we decided not to appeal . . . They’re one acre tracts. There’s something that we can’t do anything further. We can’t subdivide them, we can’t put a road in, the power isn’t there. These things are there — it’s something if a guy came to us tomorrow and said, “Listen, I’d like to sell it to you [sic],” and my boss came in and said “Well before we sell it to him, what else can we do it, you know, can we make any more money off of this piece of property?” I’d say to him no. I’d say there’s a fair market value for that piece of land. I can’t do a thing else to enhance the value. That’s a piece of property that we leave out of our appeals. . . . If my boss came in tomorrow and said we’ve got a guy in here that wants to buy that 5-acre tract and . . . he wants to develop it, he says “can you guys do anything else to enhance the property value on that?” My answer to him would be yes . . . and we take that on as land department project, enhance the values . . . . We would put in roads. We would do the subdivision design and we would carry those costs up until we sell the property and make the profit throughout the process. There’s no reason for us to give the profit away. 

…..

Seems that we’re arguing about is do you take it down to five acres. Do you take it to two acres. Do you take it to one acre. And our answer would be that, uh, from CIRI’s point of view, it’s not developed unless we can’t get an additional dollar out of it from doing something else to the property.

Mark Friedman, CIRI’s land management officer, gave another example:

And here it’s probably a good instance to look at the criteria that we’ve used to determine what should be taxed and what shouldn’t be taxed, in terms of whether the property is in a developed state or isn’t in a developed state. If we look at that one, tract 8 is in fact appropriately being taxed. We’ve got a parcel that’s 1.86 acres. There is a — there’s roads. Utilities are right on the boundary of the property. The fact is that we would not have to do anything, expend any monies to sell that property . . . as a developed state.

CIRI’s position at the hearing before the assessor is consistent with the common meaning of developed. CIRI regarded its land as developed when it had been converted into an area suitable for sale in both a legal and a practical sense. The legal sense of suitability for sale is that a parcel of land may not be divided into two or more parcels for sale without an approved and recorded plat. AS 40.15.010. See Kenai Peninsula Borough v. Kenai Peninsula Board of Realtors, Inc., 652 P.2d 471, 472 (Alaska 1982). The practical sense is that as to some parcels which legally may be sold, a knowledgeable developer desiring to maximize revenue would not sell without re-platting or making additional improvements. In our view the word “developed” as used by Congress in ANCSA includes parcels which are not only legally but practically suitable for sale under these standards.[9]

We do not mean that a particular piece of property is “developed” simply because a market exists for its sale. Although these parcels did not present this situation, it is conceivable that a Native corporation that is not itself a land developer would sell raw land that would not generally be considered developed. Land that common sense tells us is not developed does not become taxable simply by virtue of a market existing for its sale in its unimproved state; to be within this definition of “developed” the land must be practically and legally suitable for sale to the ultimate user.

It is our view that AS 29.45.030 is consistent with ANCSA with respect to the meaning of developed. The definition of developed in that statute is broad enough to include subdivided land which is ready for sale. Subdividing is legally a purposeful modification of property, for it enables separate parts of the property to be sold. Similarly, as a sale of property is a use, a subdivision which suffices to permit sales effects a gainful and productive condition.

We reach this conclusion for two reasons. First, AS 29.45.030(a)(7) expressly exempts only property which is also exempt under ANCSA. Second, if we were to construe the state statute to exempt property which is not exempt under ANCSA, serious questions concerning the constitutionality of the statute as so construed under the equal rights clause of the Alaska Constitution would be raised.[10] Because statutes are to be construed to avoid a substantial risk of unconstitutionality where adopting such a construction is reasonable, we construe the state statute to be co-extensive with ANCSA.[11]

IS SALAMATOF’S PROPERTY DEVELOPED?

Salamatof’s property can be divided into the three general categories; (1) subdivided lands in Moose Range Meadows Subdivision, (2) unsubdivided parcels in Moose Range Meadows Subdivision, and (3) two parcels in North Kenai. We discuss these below.

(1) Moose Range Meadows Subdivision

This subdivision was created by Salamatof. Its plat has been approved and recorded. Roads have been dedicated and constructed and utilities are available to the subdivision lots and Salamatof is actively marketing the property. The lots themselves have not been leveled or cleared. There are 142 Moose Range Meadows Subdivision lots involved in this appeal. As the subdivision has made these lots suitable for sale, they are developed within the meaning of section 21(d) of ANCSA.

(2) Unsubdivided parcels in Moose Range Meadows

These are four unsubdivided parcels ranging in size from 80 acres to 27 acres. They are adjacent to subdivided lots in Moose Range Meadows and they have road access. An electrical line runs along the road which they front. Since these four parcels have not been subdivided and are substantially larger than the adjacent parcels which have been subdivided, we conclude that they are not suitable for sale from the standpoint of a knowledgeable owner wishing to maximize profits and thus they should not be considered developed.

(3) North Kenai parcels

These are two vacant parcels which lie along the bluff of the eastern shore of Cook Inlet, 14 miles north of the City of Kenai. They are 36 and 42 acres in size and have no regular road access. They have not been subdivided and according to the testimony at the hearing before the assessor, cannot reasonably be made marketable until roads are installed. Since these parcels are not suitable for sale at present, they are not developed under the standards announced above.

IS CIRI’S PROPERTY DEVELOPED?

CIRI’s property is not easy to categorize. The borough breaks it down into five categories, which are somewhat overlapping. They are: (1) platted and subdivided parcels; (2) surveyed land which is divided into government lots; (3) surveyed land which has utilities available to it; (4) lake front property; and (5) the Homer radio station property. The parties’ briefs contain no comprehensive discussion of the characteristics of the parcels falling within the first four categories. Our review of the record reveals that in none of the categories is it clear that all of the property is either taxable or exempt.

With respect to the first category, platted and subdivided parcels, it appears that most of the lots owned by CIRI in the Stephenkie Subdivision are developed. However, at least two lots, 066-380-21 and 065-530-17, are substantially larger than the other lots in the subdivision and may not be suitable for sale without resubdividing.

In the second category, surveyed land which is divided into government lots, fall various township lots. CIRI claims that some of these are too large to be suitable for sale, e.g., parcel 133-120-20, a 7.9-acre parcel in the township of Kasilof, fronting the Sterling Highway. In other cases CIRI claims that they are too small and would have to be replatted with adjoining property, e.g., parcels 133-130-10 and 11, two quarter-acre lots in the Kasilof townsite.

The third category, surveyed land which has utilities available to it, seems to overlap with the second category as utilities are available to some of the land which the borough has placed in the earlier category. In any case, this category includes two 2.5-acre lots in the city of Kenai, fronted by streets and served by all utilities. (Tracts 045-070-03 and 045-210-01.) The borough argued at the hearing before the assessor that the parcels were appropriate for sale as is and CIRI contended that it would not sell the tracts without first subdividing them into parcels of one acre.

The fourth category is lake front property. Some of these are clearly suitable for sale as they are. For example, parcels 013- 042-04, 12, 20 are parcels less than two acres in size, not adjacent to other CIRI lands. CIRI acknowledged that as to these properties there could be no further steps that could be taken to improve their marketability. As to other parcels in this category, CIRI contends that they should be subdivided, e.g., parcel 012-010-14, a 5-acre tract bordering a lake and Cook Inlet, which CIRI contends it would divide into two 2.5- acre parcels.

Since the taxability or exemption of the property in these four categories was not addressed in the superior court under appropriate legal standards, a remand to the superior court for such a determination is necessary. The superior court may in turn remand some or all of these properties to the assessor if it appears that the assessor’s findings are inadequate or that he used an improper standard.

The Homer radio station property must be remanded for a different reason. This 16-acre parcel is in downtown Homer. It is served by roads and utilities and contains various structures, including several buildings, a radio tower and a network of cables and antennae. The property is used by a public radio station which pays CIRI $ 500 per year for the privilege. In our view, that portion of the property which is built on is clearly developed. A remand, however, is necessary to limit the land subject to taxation to the smallest practicable tract which is actually developed.[12] AS 29.45.030(m)(1). Even though this statute only applies to the tax years after 1984, we consider the smallest practicable tract requirement of the statute to be a sensible construction of ANCSA. The superior court is thus directed to determine the smallest practicable tract which shall be considered developed within the Homer property for all tax years involved in this case.

SANCTIONS

The superior court awarded sanctions to CIRI of $ 2,500 and to Salamatof of $ 2,400 against the borough. The corporations requested these amounts for the legal expenses expended responding to two borough motions which the corporations claimed were frivolous, and for legal expenses incurred preparing revisions to their reply briefs after the borough had changed its brief in violation of a briefing deadline.

Sanctions in administrative appeals are governed by Appellate Rule 510.[13] Part (a) of Appellate Rule 510 allows sanctions in addition to interest, costs and attorney’s fees where an appeal or a petition for review is filed merely for delay. Part (b) of Appellate Rule 510 allows the assessment of costs or attorney’s fees for any infraction of the appellate rules. Part (c) allows the assessment of a fine not to exceed $ 500 against any attorney who fails to comply with the appellate rules or any rules promulgated by the supreme court. Although the superior court did not specify under which subsection of Appellate Rule 510 it made its sanction award, the award can only be justified under subsection (b). Subsection (c) seems not to have been intended because the sanctions were directed against the borough rather than the borough attorneys. Subsection (a) speaks to delay on the part of an appellant or a petitioner. It is thus inapplicable to the dilatory conduct of the borough in this case, as the borough was the appellee.

The borough did not file a timely opposition to the corporations’ motions for sanctions. Accordingly, the borough has waived its right to object to them on appeal except on plain error grounds. In re L.A.M., 727 P.2d 1057, 1059 (Alaska 1986); A.R.C. Industries v. State, 551 P.2d 951, 961 (Alaska 1976). We have observed that plain error exists where “an obvious mistake has been made which creates a high likelihood that injustice has resulted.” Miller v. Sears, 636 P.2d 1183, 1189 (Alaska 1981).

We find that the possibility of plain error exists in this case in one respect. The trial court awarded full attorney’s fees to the corporations independent of the award of sanctions under Appellate Rule 510(b). Since 510(b) sanctions are limited to costs and attorney’s fees, there will be an impermissible double recovery of attorney’s fees if both the awards of sanctions and the awards of attorney’s fees were allowed to stand. However, at this juncture the sanction awards need not be reversed because, as noted below, the awards of attorney’s fees must be vacated. 

ATTORNEY’S FEES

The superior court awarded both corporations their actual attorney’s fees. The awards included legal expenses incurred at the administrative level at the hearings before the assessor. The corporations’ motions for attorney’s fees were combined with their motion for sanctions and were not opposed by the borough. We thus will review the awards only for plain error.

A superior court acting as a court of appeal from the decision of an administrative agency has authority to make an award of attorney’s fees under Appellate Rule 508(e). Appellate Rule 601(b). Ordinarily, where such an award is made it should only partially compensate the prevailing party for attorney’s fees and be limited to attorney’s fees incurred in court, not those incurred in a prior administrative proceeding. McMillan v. Anchorage Community Hospital, 646 P.2d 857, 867 (Alaska 1982); State v. Smith, 593 P.2d 625, 630-31 (Alaska 1979); Kodiak Western Alaska Airlines, Inc. v. Bob Harris Flying Service, Inc., 592 P.2d 1200, 1204-05 (Alaska 1979); Appellate Rule 508(b), (c), and (e). However, actual costs and attorney’s fees may be awarded where authorized by statute. Further, actual costs and attorney’s fees may be awarded to a successful appellee where the court finds that the appeal is frivolous or has been brought simply for the purposes of delay. Appellate Rule 508(e). There is no explicit authority authorizing the award of actual costs and attorney’s fees in favor of an appellee for frivolous conduct of a case on the part of an appellant. However, for specific misconduct on the part of either party, actual costs and fees may be awarded under Appellate Rule 510(b).

The trial court held that the corporations were entitled to actual attorney’s fees and costs under AS 29.45.500(a) and, alternatively, that the corporations were entitled to actual attorney’s fees under Appellate Rule 508 on the grounds that “the Borough’s judicial action was replete with unexcused delay and frivolous action.” The court concluded “that the entire Borough action was motivated by bad faith.”

Alaska Statute 29.45.500(a) provides that in tax refund suits the successful taxpayer is entitled to a refund with interest plus “costs.”[14] The trial court evidently construed the term “costs” as used in this statute to include attorney’s fees. Further, the attorney’s fees included within the statute were actual attorney’s fees rather than the partial standard ordinarily contemplated under our rules. Finally, this statute was construed to apply to prior administrative proceedings as well as to proceedings in court. We do not find plain error with respect to any of these conclusions.

Nonetheless, we believe that the award of attorney’s fees should be vacated because the ultimate disposition on the merits will be substantially different than the outright reversal ordered by the superior court. See e.g., Appellate Rule 508(c) (in cases of reversal, costs shall be allowed the appellant unless otherwise ordered by the court; in cases of partial affirmance and partial reversal the court will determine which party, if any, shall be allowed costs). Further, it is apparent that the trial court’s opinion concerning the bad faith, as distinct from the dilatory conduct, of the borough was influenced by the trial court’s mistaken view as to the merits of the tax exemption issue. Finally, assuming AS 29.45.500(a) authorizes an award of actual attorney’s fees for administrative and judicial proceedings, such fees should be apportioned and not awarded for those parcels for which taxes are due.

CONCLUSION

For the above reasons we conclude:

As to Salamatof Native Association, Inc.:

1. As to all properties for the tax years 1981 through 1983, the judgment is REVERSED.

2. As to Moose Range Meadows Subdivision for the tax years 1984 through 1986, the judgment is REVERSED.

3. As to the unsubdivided parcels in Moose Range Meadows Subdivision and the North Kenai parcels for the tax years 1984 through 1986, the judgment is AFFIRMED.

4. The award of sanctions is AFFIRMED.

5. The award of attorney’s fees and costs is VACATED. As to Cook Inlet Region, Inc.:

1. As to all parcels, the judgment is REVERSED and the matter is REMANDED for further proceedings in accordance with this opinion.

2. As to sanctions, the judgment is AFFIRMED.

3. As to costs and attorney’s fees, the judgment is VACATED.

Broad v. Sealaska Corp.

Sealaska Corporation, a Native regional corporation organized under the Alaska Native Claims Settlement Act (ANCSA), established a “settlement trust” as authorized in an amendment to ANCSA. This trust, titled the Elders’ Settlement Trust (EST), provides a one time $2000 payment to each Sealaska shareholder who reaches sixty-five years of age. The plaintiffs, who are shareholders of Sealaska under age sixty-five, filed a class action complaint in Alaska state court claiming that creation of the settlement trust violated state corporations law and the provisions of ANCSA. Sealaska removed to federal district court and the parties stipulated to deferring the request for class certification.

The plaintiffs appeal from the district court’s order granting summary judgment in favor of Sealaska on all claims. The district court had jurisdiction under 28 U.S.C. § 1441(a) and this Court has jurisdiction under 28 U.S.C. § 1291. We review a district court’s grant of summary judgment de novo. Warren v. City of Carlsbad, 58 F.3d 439, 441 (9th Cir. 1995). We affirm.

I.

Congress enacted ANCSA, 43 U.S.C. § 1601 et seq., in 1971 “to achieve a fair and just settlement of all aboriginal land [in Alaska] . . . with maximum participation by Natives in decisions affecting their rights and property.” 43 U.S.C. § 1601 note (Supp. 1995) (Congressional Findings and Declaration of Policy for ANCSA Amendments of 1987). To accomplish this goal, ANCSA created regional corporations to hold and manage the Native land settlements. Congress amended ANCSA in 1987 to ensure the continuing success of the Native corporations. The amendments included a provision permitting a corporation to create a “settlement trust,” a vehicle into which a corporation could transfer assets that were to be used for the health, education, and welfare of the trust beneficiaries. Assets held in these trusts enjoy protection from the corporation’s creditors.

Sealaska, which is the Native Corporation for the Southeast Panhandle of Alaska, saw the settlement trust as a means to recognize the contributions of its elder shareholders and to assist them financially. The board of directors adopted a resolution to establish the EST, a trust that would be funded with corporate assets, and that would distribute $20 per share to shareholders aged sixty-five or older.

The board sent to all shareholders a proxy statement for the 1991 shareholder meeting and a description of the proposal, both of which included information about the benefits and disadvantages of the EST. The resolution received an affirmative vote from 50.7 percent of all outstanding shares, and thereby passed. The board appointed trustees and authorized the President and CEO to prepare the trust document. As of December 10, 1991, the trust has been operating according to the terms of the resolution.

In September 1992 the plaintiffs filed a class action suit in the Alaska Superior Court claiming that the cash disbursements paid out through the trust constitute a constructive dividend. They assert that this dividend is an illegal distribution because it discriminates between Sealaska shares of the same class.

Sealaska removed the case to federal court, and the parties filed cross-motions for summary judgment. In their answer to Sealaska’s motion, the plaintiffs raised several additional claims. First, they argued that the proxy materials Sealaska supplied to its shareholders did not comply with applicable law because the information given was misleading and omitted material facts. Second, they argued that nonvoting shareholders should have been allowed to vote on the establishment of the EST. Finally, they claimed that the EST, under authority of federal law, takes property from the shareholders without just compensation, and thus violates their rights under the Fifth Amendment of the United States Constitution.

The district court issued several orders, which, taken together, entered judgment in favor of Sealaska and against the plaintiffs on all claims. The plaintiffs appealed asserting an additional claim under the Due Process Clause of the Fifth Amendment. We affirm the district court’s judgment on all claims, and dismiss the Due Process claim because it is not properly before us.

II.

The plaintiffs’ original complaint contended that the EST’s disbursement of funds to elder shareholders is illegal as a discriminatory distribution under Alaska corporations law. Sealaska countered that the settlement trust provisions of ANCSA preempt state law in this respect and, therefore, the EST is a valid settlement trust authorized by ANCSA. We affirm the district court’s holding that ANCSA displaces contrary state law with respect to settlement trusts, and that the EST is proper under ANCSA.

Under the Alaska Corporations Code a corporation must give equal treatment to all shares of the same class and must make its distributions without discrimination. Alaska Stat. § 10.06.305(b). Both parties agree that the EST discriminates against shareholders who have not yet reached age sixty-five. Therefore, if the EST distributions are treated as shareholder dividends, then the payments made through the trust would violate Alaska state law and would be illegal unless authorized by ANCSA.

The district court correctly concluded that ANCSA’s provisions explicitly preempted state law with respect to corporate resolutions that establish settlement trusts. But the relevant inquiry is not whose law governs the establishment of the trust, but instead whether a state law that prohibits the actions taken by the trust is preempted by federal law. Preemption of state law regarding trust distributions is not explicitly covered by the ANCSA settlement trust provisions. Nevertheless, we find that ANCSA implicitly preempts state law in this respect.

Congress provided that conveyance of assets into settlement trusts must be carried out “in accordance with the laws of the State (except to the extent that such laws are inconsistent with [sections 1629b and 1629e of ANCSA]).” 43 U.S.C. § 1629e(a)(1)(A) (Supp. 1995) (emphasis added). Section 1629e requires that each trust be established “to promote the health, education, and welfare of its beneficiaries and to preserve the heritage and culture of Natives.” 43 U.S.C. § 1629e(b)(1). Furthermore, it limits the use of these trusts, specifically prohibiting trusts that “discriminate in favor of a group of individuals composed only or principally of employees, officers, or directors of the settlor Native Corporation.” 43 U.S.C. § 1629e(b)(1)(C).

According to its plain language, then, ANCSA prohibits settlement trusts that discriminate in favor of corporate insiders, but does not otherwise prohibit trusts that discriminate in favor of other groups of shareholders. This statutory section suggests that ANCSA anticipates that trusts may discriminate in favor of a particular class of shareholders. As a result, a state law that prohibits discriminatory trusts conflicts with ANCSA. When federal and state laws actually conflict, the state law is preempted. See Wisconsin Public Intervenor v. Mortier, 501 U.S. 597, 605, 115 L. Ed. 2d 532, 111 S. Ct. 2476 (1991) (“Such a conflict arises when… a state law ‘stands as an obstacle to the accomplishment and execution of the full purposes and objectives of Congress.'”) (quoting Hines v. Davidowitz, 312 U.S. 52, 85 L. Ed. 581, 61 S. Ct. 399 (1941)).

Additionally, the Alaska Corporations Code itself recognizes ANCSA’s supremacy when conflicts arise: “a corporation organized under [ANCSA] is governed by [ANCSA] to the extent [ANCSA] is inconsistent with [the Alaska Corporations Code].” Alaska Stat. § 10.06.960(f). Because ANCSA allows trusts that discriminate in favor of some shareholders, and the Alaska Corporations Code proscribes such actions, federal and state law conflict. In such cases, the federal law prevails. Thus, Alaska corporations law abdicates in favor of ANCSA with respect to settlement trust distributions.

Plaintiffs further contend that even if ANCSA does govern establishment of the EST, the EST is a misuse of the settlement trust option for two reasons: (1) because Congress only envisioned the trusts as land protection devices, and (2) because Congress did not intend settlement trusts to confer special benefits on subclasses of Natives. We reject both these arguments and affirm the district court’s holding that the EST conforms with the provisions and purpose of ANCSA.

First, the argument that the settlement trust was intended only as a method by which corporations could shield land from creditors is belied by ANCSA’s text and history. The EST, admittedly, does not aim specifically to protect land. [1] But the text of ANCSA imposes no limitation on what can properly be the res of the trust. It allows Native Corporations to convey “assets (including stock or beneficial interests therein) to a Settlement Trust.” 43 U.S.C. § 1629e(a)(1)(A). The permissible purposes given in the text do not relate only to interests in land: “The purpose of a Settlement Trust shall be to promote the health, education, and welfare of its beneficiaries and preserve the heritage and culture of Natives.” 43 U.S.C. § 1629e(b)(1). Furthermore, ANCSA does specifically proscribe several purposes, [2] but nowhere does the text of ANCSA’s settlement trust option prohibit the purposes espoused by the EST.

Second, nothing in the text of the settlement trust provisions prohibits trust distributions to less than all shareholders. In his dissent, Judge Kleinfeld argues that the EST is nothing more than an impermissible “birthday present” to elder shareholders at the expense of those not yet 65 years old. Under his interpretation of the settlement trust option, any use of a settlement trust to benefit a subset of shareholders is improper. Such an interpretation of Section 1629e would render the settlement trust option superfluous for any purpose except as a land preservation mechanism. Alaska law and ANCSA already allow regional corporations to distribute dividends to all shareholders equally. Admittedly, the Native corporations could still use settlement trusts to preserve Native land and to protect it from creditors, while making equal distributions to all shareholders through the trust instead of through traditional corporate dividends. But nothing in ANCSA supports such a limited interpretation of the settlement trust provisions.

The legislative history of the 1987 amendments to ANCSA suggests a much more expansive purpose for settlement trusts:

Settlement Trusts are expected to serve two principal functions. They are intended to be permanent, Native-oriented institutions which shall hold and manage, in perpetuity, any historic or culturally significant surface lands, sites, cemeteries, traditional use areas, or monuments, for the benefit of the beneficiary population. . . .
 
The other prime function relates to the health, education and economic welfare of its beneficiaries. . . . At the discretion of the trustees, [trust assets or income from trust assets] can be used to provide scholarships and other educational benefits. Assets can be used to improve health care delivery or facilities, pay for needed health care and otherwise be devoted to bettering the health of the beneficiary Native community. Finally, the Trust assets may be used to bolster the economic well- being of the beneficiaries. Trust distributions may be used to fight poverty, provide food, shelter and clothing, and serve comparable economic welfare purposes. Additionally, cash distributions of trust income may be made on an across-the-board basis to the beneficiary population as part of the economic welfare function.

133 Cong. Rec. H11,933 (daily ed. Dec. 21, 1987) (House Explanatory Statement), reprinted in 1987 U.S.C.C.A.N. 3299, 3307-08 (emphasis added). This description clearly permits across-the-board distributions to all shareholders. But it permits these distributions in addition “provide food, shelter and clothing” then it seems reasonable that distributions will be made based on need, rather than on an across-the-board basis.

In promulgating the 1987 amendments, Congress noted that the corporate structure is not in every instance “well adapted to the reality of life in Native villages and to the continuation of traditional Native cultural values.” 43 U.S.C. § 1601 note (Congressional Findings and Declaration of Policy for ANCSA Amendments of 1987) (Supp. 1995). Therefore, Congress intended the amendment to “enable the shareholders of each Native Corporation to structure the further implementation of the settlement in light of their particular circumstances and needs.” Id. To require that settlement trust distributions be treated in every way like corporate dividends would simply reinforce the corporate structure, and limit the flexibility with which shareholders could structure their settlement.

Both the text and the legislative history support the contention that Congress intended settlement trusts as flexible instruments that would serve a number of purposes besides simply shielding Native land from creditors. Section 1629e gives a broad statement of the permissible purposes for settlement trusts, i.e., to promote the health, education, and welfare of the Native population. Nothing in this section explicitly prohibits distributions to less than all shareholders, except groups composed primarily of corporate insiders. [3] Although, as the dissent suggests, Alaska corporations law could serve to prohibit such distributions, the legislative history of the settlement trust provisions suggests that Congress intended to allow distributions to subsets of shareholders. Therefore, given the broad statement of purpose for settlement trusts, and the further elaboration of this purpose in the legislative history, the most reasonable interpretation of Section 1629e would allow Native corporations to establish settlement trusts to benefit subclasses of shareholders.

Congress placed few limitations on the use of settlement trusts, thus enabling Native Corporations the greatest flexibility to structure their settlement to best fit the particular needs of their community. This might be construed to suggest that Native Corporations can use settlement trusts to contravene Alaska corporations law with impunity, and to thereby disadvantage many shareholders.

ANCSA does, however, limit the use of settlement trusts in several ways. It proscribes some trust activities, and defines the specific purposes for which these trusts may be created, i.e., for the health, education, and welfare of the Native community. Although this allows a wide range of applications, to simply quote this language in the preamble of a settlement trust resolution does not by itself confer validity on the proposed trust, as the dissent suggests. Judicial review of these trusts will prevent egregious violations of the settlement trust option, such as those “bizarre transfers” cited by the dissent. For example, these limits would easily preclude a trust that sought merely to discriminate against shareholders who were not members of the majority shareholders’ extended family.

Furthermore, ANCSA requires majority or supermajority shareholder approval before corporations may transfer assets to these trusts. 43 U.S.C. § 1629b(d). As with any major corporate decision, shareholder approval does not necessarily guarantee that the outcome is the most prudent course of action. But it does provide some measure of oversight.

Finally, ANCSA specifies that Alaska state law governs settlement trusts in many instances, insofar as the state laws do not conflict with ANCSA. For example, Alaska trust law governs the creation and management of the trust, and Alaska corporations law defines the requirements for proxy solicitation materials, as is discussed in part III below.

These limitations should provide shareholders with sufficient protection with respect to settlement trusts, while also leaving enough flexibility to meet Congress’ goals.

In conclusion, the ANCSA settlement trust provisions preempt Alaska Corporations Code with respect to discriminatory settlement trusts. Sealaska’s establishment of the EST conforms with the provisions and purpose of the ANCSA settlement trust option. We therefore hold that the EST is a proper use of the settlement trust provisions of ANCSA.

III.

Even if Sealaska properly created the EST as authorized by ANCSA, the plaintiffs argue that shareholder approval of the EST was improper under Alaska corporations law, and that disputed issues of fact render summary judgment improper. We agree with the district court’s grant of summary judgment in favor of Sealaska on this issue.

First, the plaintiffs contend that the proxy solicitation materials sent to shareholders were misleading and omitted material facts. The 1987 ANCSA amendments make clear that proxy statements and solicitations made in the course of a Native Corporation’s efforts to establish a settlement trust must comply with state law. 43 U.S.C. § 1629b (Supp. 1995). Alaska law prohibits solicitations and proxy statements that contain material misrepresentations, i.e., statements that are “false or misleading with respect to a material fact [or] omit[] a material fact necessary in order to make a statement made in the solicitation not false or misleading.” 3 Alaska Admin. Code, tit. 3, § 08.315(a); see also TSC Indus. v. Northway, 426 U.S. 438, 449, 48 L. Ed. 2d 757, 96 S. Ct. 2126 (1976) (same); Brown v. Ward, 593 P.2d 247, 249-50 (Alaska 1979) (although the letter of federal proxy rules does not apply to ANCSA corporations, the spirit does).

The plaintiffs assert a variety of claims that material facts were not disclosed or were concealed in the proxy materials. For example, they claim that Sealaska omitted a material fact by expressing the cost of the EST as a lump sum of about $ 6 million rather than as cost per share. The district court found, however, and we agree, that the proxy solicitation materials comported with Alaska law, and that plaintiffs failed to raise genuine issues of fact as to whether they were misleading or omitted material facts.

Second, plaintiffs assert that shareholder approval of the EST resolution is invalid because nonvoting shares were not allowed to vote on the proposal. ANCSA provides that shares held by non-Natives that were acquired through inheritance do not carry voting rights. 43 U.S.C. § 1606(h)(2)(C) (Supp. 1995). Then, it specifically conditions approval of a settlement trust upon majority vote of “the total voting power of the corporation,” defined as “all outstanding shares of stock that carry voting rights.” 43 U.S.C. §§ 1629b(d)(1)(A) and 1629b(e) (emphasis added). Thus, ANCSA itself provides that nonvoting shares have no right to vote on corporate resolutions establishing settlement trusts.

The plaintiffs seek to avoid this conclusion by arguing that under state law, nonvoting shares do get to vote on certain fundamental corporate changes. This argument fails, however, because, as discussed previously, section 1629b expressly states that corporate resolutions to establish a settlement trust shall be governed by the provisions of ANCSA, “notwithstanding any provision . . . of the laws of the State.” 43 U.S.C. § 1629b(a). Thus, the nonvoting shares were properly denied the right to vote on the EST resolution.

Give the foregoing, we reject plaintiffs’ claim that shareholder approval of the EST resolution was invalid and affirm the district court’s grant of summary judgment on this claim

IV.

The plaintiffs’ final argument is that section 1629e of ANCSA is unconstitutional as applied to them for two reasons: first, allowing creation of the EST impairs the shareholders’ “contract” rights under the articles of incorporation, and thus, section 1629e violates the Due Process Clause of the Fifth Amendment; second, because it authorizes Sealaska to transfer $6 million of its corporate equity to the EST, section 1629e permits a “taking” of the disadvantaged shareholders’ property in violation of the Fifth Amendment.

Plaintiffs assert their due process claim for the first time on appeal. Generally, an appellate court will not hear an issue raised for the first time on appeal. Golden Gate Hotel Ass’n v. San Francisco, 18 F.3d 1482, 1487 (9th Cir. 1994) (citing Singleton v. Wulff, 428 U.S. 106, 120, 49 L. Ed. 2d 826, 96 S. Ct. 2868 (1976)). To have been properly raised below, “the argument must be raised sufficiently for the trial court to rule on it.” In re E.R. Fegert, Inc., 887 F.2d 955, 957 (9th Cir. 1989). Because this issue was not raised below, we decline to reach the merits.

AS to the takings claim, we agree with the district court that, as a matter of law, the claim fails. However, we do not agree with the district court’s reasoning on this issue.

The district court began its analysis “with the assumption that the use of corporate assets to create the EST amounted to a taking of the non-voting shareholders [sic] equity in the corporation for which no compensation was provided.” We question the validity of this assumption. The property interest plaintiffs seek to protect is the value of their Sealaska stock. [4] But takings cases almost universally involve governmental action that affects ownership rights in real property, and plaintiffs cite no case authority for their claim that the Takings Clause protects their interest in Sealaska’s corporate equity.

Furthermore, corporate shareholders do not directly own any part of a corporation’s property or assets. They only own shares of stock, which represent a proportionate interest in the corporate equity remaining after a corporation meets all its other debts and obligations. The profits themselves belong to the corporation, and do not pass to the shareholders unless and until the board of directors declares a dividend. Thus, the plaintiff shareholders have no proprietary interest that could have been “taken.”

Nevertheless, even if we accept the premise that plaintiffs’ interest in Sealaska’s corporate equity may be the subject of a takings claim, the claim still fails for lack of sufficient government action. Takings jurisprudence encompasses two lines of authority: physical occupation cases, and regulatory takings cases. Compare Loretto v. Teleprompter Manhattan CATV Corp., 458 U.S. 419, 73 L. Ed. 2d 868, 102 S. Ct. 3164 (1982) (holding that New York law requiring landlords to allow cable television companies to install cables in their buildings constituted a physical intrusion sufficient to be a taking) with Lucas v. South Carolina Coastal Council, 505 U.S. 1003, 112 S. Ct. 2886, 2895, 120 L. Ed. 2d 798 (1992) (indicating that when a government land use regulation forces the owner of real property “to sacrifice all economically beneficial uses [of his property,] he has suffered a taking”). Plaintiffs allege no physical invasion of property, so their claim must fall into the regulatory taking category.

Regulatory takings generally require some government regulation or other government action that compels the owner to sacrifice all economically viable use of his or her property. E.g., Lucas, 505 U.S. 1003, 112 S. Ct. 2886, 120 L. Ed. 2d 798 (the state’s coastal preservation statute prevented the landowner from building any structure on his property). In this case, Sealaska was not in any way compelled by the federal government to create the EST. The settlement trust option is just that – an option. That Sealaska’s action was authorized by federal law does not transmute it into government action sufficient for the Fifth Amendment. Without governmental encouragement or coercion, actions taken by private corporations pursuant to federal law do not transmute into government action under the Fifth Amendment. See, e.g., Fidelity Financial Corp. v. Federal Home Loan Bank, 792 F.2d 1432, 1435 (9th Cir. 1986), cert. denied, 479 U.S. 1064, 93 L. Ed. 2d 998, 107 S. Ct. 949 (1987) (finding no government action in a bank’s loan decision even though the bank was created by a federal agency to accomplish federal objectives, was subject to extensive federal regulation, and some of the bank’s directors and managers were appointed by a federal bank board). But see Ginn v. Mathews, 533 F.2d 477, 480 (9th Cir. 1976) (finding governmental action in an employment decision made by the Economic Opportunity Council of San Francisco, but emphasizing that the Council was operating with almost exclusively federal funds); Burton v. Wilmington Parking Authority, 365 U.S. 715, 6 L. Ed. 2d 45, 81 S. Ct. 856 (1961) (finding government action largely on the basis that the defendant, a private lessee, received significant financial support from the parking authority). Even in cases in which the court found government action, it often reiterated the general principle that “where the action taken is entirely by a private corporation with no overriding or pervasive [government] involvement, the provisions of the First, Fifth, and Fourteenth Amendments impose no limitations upon that action.” Ginn, 533 F.2d at 479.

In this case, Sealaska is a private corporation that established the EST using private funds. The operation of the trust is not subject to governmental oversight. Furthermore, Sealaska was neither encouraged nor coerced into creating the EST by the federal government. It merely exercised its option under ANCSA to transfer its assets to a settlement trust. We therefore affirm the grant of summary judgment in favor of Sealaska on the plaintiffs’ takings claim. [5]

V.

Through instruments like the settlement trust, Congress sought to expand the ability of Native Corporation shareholders to “structure the further implementation of the settlement in light of their particular circumstances and needs.” 43 U.S.C. § 1601 note (Supp. 1995) (Congressional Findings and Declaration of Policy for ANCSA Amendments of 1987). Sealaska did just that, establishing its Elders’ Settlement Trust to address concerns related to the welfare of its elder shareholders. We conclude that Sealaska’s Elders’ Settlement Trust is a legitimate use of the settlement trust option as authorized by ANCSA, and that such use comports with the plain language and the purpose of the ANCSA amendments. The district court’s order granting summary judgment in favor of Sealaska on all claims is AFFIRMED.


Dissent by: KLEINFELD, Circuit Judge

Dissent

I respectfully dissent.

Sealaska, organized as a business corporation, decided to give each shareholder a $2,000 birthday present at age 65. That discriminates by age, because at the time of the decision, not all the shareholders were 65. Several directors would immediately or soon receive this substantial gift. Many shareholders would not receive the gift for decades. The present value of the gift, assuming a 5% interest rate, is $ 2,000 to a 65 year old director, $ 284 to a 25 year old shareholder.

This discriminatory cash gift to shareholders, as the majority acknowledges, would violate Alaska corporation law, if federal law does not provide otherwise. Under the Alaska Corporations Code, all Alaska corporations must treat all shares in the same class equally with respect to dividends and other rights. Alaska Stat. §§ 10.06.542, 10.06.305(b).

The preemption analysis used in the majority opinion is mistaken, because any preemption is illusory. There cannot be federal preemption of state law in this case, because there cannot be any conflict between the two laws. The state law says that a native corporation can do anything ANCSA permits. AS 10.06.090(f). That means there can be nothing which ANCSA permits but state law prohibits, so there can be no conflicting state law to preempt. ANCSA says that a conveyance to a settlement trust should be in accord with Alaska law except to the extent that state law is inconsistent with ANCSA. 43 U.S.C. § 1629e(a)(1)(A). That means that there can be no preemption of the field. If federal law permits the particular discriminatory cash transfer through the settlement trust, state law does too, and if not, not.

The majority opinion says that “according to its plain language, then, ANCSA prohibits settlement trusts that discriminate in favor of corporate insiders, but does not prohibit trusts that discriminate in favor of other groups of shareholders.” Maj. op. at 5872. The “plain language” consists only of the prohibition. The non-prohibition described in that sentence is an inference from silence, not an expression by Congress in plain language. The provision which provides the basis for the majority’s conclusion states only what is prohibited, not what is permitted:

The purpose of a Settlement Trust shall be to promote the health, education, and welfare of its beneficiaries and preserve the heritage and culture of Natives. A Settlement Trust shall not –

(A) operate as a business;

(B) alienate land or any interest in land received from the settlor Native Corporation (except if the recipient of the land is the settlor corporation); or

(C) discriminate in favor of a group of individuals composed only or principally of employees, officers, or directors of the settlor Native Corporation. An alienation of land or an interest in land in violation of this paragraph shall be void ab initio and shall not be given effect by any court.

43 U.S.C. § 1629e(b)(1) (emphasis added). The majority reasons that because the statute prohibits trusts that discriminate in favor of employees, officers, and directors, “but does not otherwise prohibit trusts that discriminate in favor of other groups of shareholders[,] this statutory section suggests that ANCSA anticipates that trusts may discriminate in favor of a particular class of shareholders.” Maj. op. at 5872.

This method of reasoning, inferring from the explicit prohibition of one form of discrimination the implicit authorization of all other forms, is a traditional application of the maxim, expressio unius est exclusio alterius. Quoting the maxim is less fashionable than it used to be before Karl Llewellyn’s famous attack. See Karl N. Llewellyn, Remarks on the Theory of Appellate Decision and the Rules or Canons About How Statutes Are to Be Construed, 3 Vand. L. Rev. 395, 401-406 (1950), as reproduced in, Karl N. Llewellyn, The Common Law Tradition: Deciding Appeals App. C, 521-35 (1960). But the logic of the maxim, that listing several specific things implies an intention to exclude others, is the only way to get from a statutory prohibition of some conduct to implied permission for other conduct. This is how the majority gets from the “shall not” in the statute to the majority’s statement that “ANCSA anticipates that trusts may discriminate in favor of a particular class of shareholders.”

The expressio unius analysis is often correct, but not always. It does not make sense here. Anytime a statute contains a list, the question arises whether the list exhausts all the things the legislature intended to permit or prohibit. The inference that a list excludes things not on the list does not relieve us of our duty to make sense of the statute:

Most strongly put, the expressio unius, or inclusio unius principle is that ‘when a statute limits a things to be done in a particular mode, it includes a negative of any other mode.’ Raleigh & Gaston Ry. Co. v. Reid, 80 U.S. (13 Wall.) 269, 270, 20 L. Ed. 570 (1871). This is a rule of interpretation, not a rule of law. The maxim is ‘a product of logic and common sense,’ properly applied only when it makes sense as a matter of legislative purpose. Alcaraz v. Block, 746 F.2d 593, 607-08 (9th Cir. 1984). Like the principle of construing a modifying clause to modify only the closer antecedent, the expressio unius principle describes what we usually mean by a particular manner of expression, but does not prescribe how we must interpret a phrase once written. Understood as a descriptive generalization about language rather than a prescriptive rule of construction, the maxim usefully describes a common syntactical implication. ‘My children are Jonathan, Rebecca and Seth’ means ‘none of my children are Samuel.’ Sometimes there is no negative pregnant: ‘get milk, bread, peanut butter and eggs at the grocery’ probably does not mean ‘do not get ice cream.’

Longview Fibre Co. v. Rasmussen, 980 F.2d 1307, 1312-13 (9th Cir. 1992).

It does not make sense to suppose that Congress meant, by the list in § 2629e(b)(1), to permit any kind of discrimination, except “discrimination in favor of . . . employees, officers or directors.” Consider, by analogy, that Congress in the Americans With Disabilities Act said “no covered entity shall discriminate against a qualified individual with a disability.” 42 U.S.C. § 12112. The ADA does not by that prohibition imply that discrimination by reason of age, sex, and race are permissible. The provision prohibits one kind of discrimination, and leaves it to other federal and state laws to prohibit others. That is the sensible way to read the prohibition in the statute before us.

This makes sense as a Congressional purpose. Congress might have felt that there were special risks to Native corporations that they would be taken advantage of by employees, officers and directors through the Settlement Trust mechanism, unique to Native Corporations, so more protection of shareholders from this device was needed than for ordinary business corporations, but felt that for other risks, state law protections were adequate. One of the virtues of the Alaska Native Claims Settlement Act was the creation of a large number of Alaska Native leaders experienced in business as well as politics, and employment opportunities in towns and villages where there had previously been little work for money wages. But this virtue could become a vice if the corporations were operated for the benefit of their employees, who might not be natives or shareholders, instead of for all the Natives who owned stock and would inherit stock.

Virtually any transfer of corporate assets could be provided for in a resolution which, in its preamble, said that the transfer was to “promote the . . . welfare of its beneficiaries,” and, so long as the recipients were Alaska Natives, to “preserve the heritage and culture of Natives.” Unless someone thinks of a distinction in some future case, the majority holding implies that Congress meant to permit some bizarre transfers of Native corporation assets. For example, a Native corporation might decide that a particular candidate for office was likely to promote the health, education, and welfare of Alaska Natives better than competing candidates, and that Native culture would best be preserved by using a trust to pay $2,000 to each Native who signed an affidavit that he or she had voted for the named candidate. Quite a few Alaska native villages have fewer than 100 people, and many have under 300. See The Alaska Almanac: Facts About Alaska 17th Edition 130-31, 147-53 (Carolyn Smith ed.) (1993). Village Corporations may create settlement trusts under ANCSA. 43 U.S.C. §§ 1602 (defines “Native Corporation” to include “Village Corporation”) & 1629e (permits any Native Corporation to create a settlement trust). Under the majority construction of the statute, a village corporation, a majority of whose shareholders were linked by blood or property to a large extended family, might decide that Native culture was best preserved by funneling the assets through a settlement trust out to their family and not the other families in the village.

The majority says that “judicial review of these trusts will prevent egregious violations of the settlement trust option, such as [these] ‘bizarre transfers.'” But it does not say how. The majority opinion establishes that the federal law preempts state law, and “does not otherwise prohibit trusts that discriminate in favor of other groups of shareholders,” and “trusts may discriminate in favor of a particular class of shareholders.” Maj. op. at 5872. I hope that subsequent panels distinguish the case at bar if “bizarre transfers” through settlement trusts are made, but I do not see a basis, in the majority’s ratio decidendi, for making a distinction.

In any corporation, Native or not, people with more power than others may try to translate their power into money. It is unlikely that Congress meant to deprive Native corporation shareholders of all the protections state corporation law generally gives to shareholders against discriminatory distributions of corporate assets. Yet the hypothetical forms of discrimination described above would not be “in favor of a group of individuals composed only or principally of employees, officers, or directors,” so under the majority holding, any state law prohibiting such discrimination would be preempted. None of this seems likely to have been the intent of Congress, because it does not make any practical sense.

If we are to apply the expressio unius principle to anything, it should be to the statutory provision speaking directly to how to enhance benefits to elders. There is a special provision for issuance of up to 100 additional shares of regional corporation stock to natives who have attained the age of 65:

A Regional Corporation may amend its articles of incorporation to authorize the issuance of additional shares of Settlement Common Stock to –
. . .
(III)  Natives  who  have  attained  the  age  of  65,  for  no consideration or for such consideration and upon such terms and conditions as may be specified in such amendment or in a resolution approved by the board of directors pursuant to authority expressly vested in the board by the amendment. The amendment to the articles of incorporation may specify which class of Settlement Common Stock shall be issued to the various groups of Natives.

43 U.S.C. § 1606(g)(B)(i).

The expressio unius inference, as applied to this section, implies that Congress intended that discrimination in favor of elders would take place only through regional corporations, not village corporations, and exclusively through amendments to the articles of incorporation issuing more stock to elders (which may, in turn, yield more dividends). See 43 U.S.C. § 1606(g)(b)(iv) (common stock issued to elders as the result of a special amendments shall not have rights to certain distributions unless a majority of shareholders specially grant such rights). Accordingly, we could assume that Congress intended to leave in place state prohibitions against other forms of discrimination in favor of elders.

One use of settlement trusts is to preserve native corporation assets from creditors, see 43 U.S.C. § 1629e(c)(5), and from the consequences of accidental corporate dissolution. The statute states the purpose of settlement trusts, “to promote the health, education, and welfare of its beneficiaries and preserve the heritage and culture of Natives.” 43 U.S.C. § 1629e(b). Most corporations cannot operate for such purposes, so excluding discriminatory dividends from the purposes does not strip the statute of practical effect. We need not decide whether the statements in the legislative history, such as that settlement trusts can be used to award scholarships to individuals, are correct. Perhaps such scholarship programs are permissible, so long as the criteria for the scholarship awards are nondiscriminatory. Or perhaps this snippet of legislative history was a consolation prize to someone who did not get what he or she wanted in the statute. We should not assume the answer to one difficult question not before us in order to resolve another.

The majority relies too heavily, in my view, on the “House Explanatory Statement.” Maj. op. at 5874. We should construe the statute, not the legislative history. See Kenneth W. Starr, Observations About the Use of Legislative History, 1987 Duke L.J. 371 (1987). Reliance on legislative history is often the “equivalent of entering a crowded cocktail party and looking over the heads of the guests for one’s friends.” Conroy v. Aniskoff, 507 U.S. 511, 519, 123 L. Ed. 2d 229, 113 S. Ct. 1562 (1993) (Scalia, J. concurring). The majority infers from the statement in the House Explanatory Statement that if scholarships are permissible, then so are birthday presents. A stronger inference would be that if “distributions of trust income may be made on an across-the board basis,” House Explanatory Statement, 133 Cong. Rec. H11,933, (daily ed. Dec. 21, 1987), reprinted in, 1987 U.S.C.C.A.N. 3299, 3308, then they cannot be made on a discriminatory basis.

In sum, the statute says some types of discrimination are prohibited, and also says that Native corporations can provide for issuance of additional shares of stock to elders. The majority reads a negative pregnant into the discrimination section but not the elders section. I do not see why the first inference is any stronger than the second, and see good reason for the contrary view. The majority infers from the statement about scholarships in the legislative history that discriminatory distributions are permitted, but draws no inference that they are prohibited from the “across-the-board” language about distributions in the same paragraph. We must necessarily exercise judgment on difficult questions to decide the extent to which the statute exposes Native shareholders to discriminatory distributions of corporate assets. I believe Congress left in place more of the state law protection generally applicable to corporate shareholders than the majority does.

Oliver v. Sealaska Corp.

Plaintiff Glenn Oliver appeals the district court’s dismissal of Oliver’s action to enforce revenue-sharing requirements of the Alaska Native Claims Settlement Act, 43 U.S.C. §§ 1601-1629f (Supp. III 1997) (“ANCSA” or “the Act”). Oliver sued the twelve Regional Corporations in the Superior Court of Alaska under Alaska Statutes § 10.06.015 (Michie 1989) on behalf of himself and a putative class of shareholders, seeking declaratory judgment, an accounting, and a resulting trust. The action was removed [**2] to the district court for the District of Alaska, and the first-served defendant corporation, later joined by nine other defendants, moved to dismiss under Federal Rule of Civil Procedure 12(b)(6). The district court dismissed without prejudice, holding that ANCSA § 7(i) & (j), 43 U.S.C. § 1606(i) & (j), did not create an independent cause of action, and that Oliver’s direct action was not cognizable under § 10.06.015. We have jurisdiction under 28 U.S.C. § 1291 (1994), and we affirm.

I

Enacted in 1971, ANCSA granted Alaskan Natives approximately 44 million acres of land and $ 1 billion in exchange for the extinguishment of aboriginal title to land in Alaska. The Act created twelve Regional Corporations, organized under Alaska Law, to take title to most of the land and all of the money. The Act also created more than 200 “Village Corporations,” each within one region, which took title to 22 million acres of surface estate. All of the stock in the Regional and Village corporations is owned by the approximately 70,000 Alaska Natives; residents of a given Village own stock in that Village Corporation and in the corresponding Regional Corporation, while Natives like Oliver who do not reside in a Village own at-large shares of their Regional Corporation. Through inheritance, Oliver owns shares in two Regional Corporations.

Because of the disparity in natural wealth among the twelve regions, § 7(i) provides for revenue sharing:

Seventy per centum of all revenues received by each Regional Corporation from the timber resources and subsurface estate patented to it pursuant to this chapter shall be divided annually by the Regional Corporations among all twelve Regional Corporations organized pursuant to this section according to the number of Natives enrolled in each region pursuant to section 1604 of this title . . . .

In turn, § 7(j) of the Act requires each Regional Corporation to distribute 50 percent of its shared revenues to its Village Corporations and at-large shareholders.

The vague language through which ANCSA mandated revenue sharing resulted in litigation over what qualifies as “revenues” to be shared. In May 1983, with the help of a special master appointed by the district court, the twelve Regional Corporations entered into a settlement (the ” § 7(i) settlement”) regarding the revenue-sharing provision, and in June 1983, the district court for the District of Alaska approved the § 7(i) settlement. (Aleut Corp. v. Arctic Slope Regional Corp., No. A75-0053-CV (D. Alaska June 3, 1983)).

II

Oliver contends in this suit that the § 7(i) settlement improperly deprives him, other at-large shareholders, and the Village Corporations of monies due to them from revenue sharing under ANCSA. Oliver argues that the corporations in which he holds stock, Cook Inlet Region, Inc. (“CIRI”) and Sealaska Corp., committed an ultra vires act by contracting away their rights under § 7(i), and, because Oliver is one of the shareholders entitled by § 7(j) to 50 percent of the shared revenues, he claims to be deprived of money to which he is entitled. Specifically, Oliver alleges that due to the settlement agreement, future income of the Arctic Slope Regional Corp. will not be fully shared as ANCSA requires.

The district court held that no provision of ANCSA or Alaska corporation law provides Oliver with a direct cause of action to contest the settlement agreement. The court then permitted Oliver to amend his complaint to allege a derivative action against CIRI and Sealaska, the corporations in which he is a shareholder. When Oliver refused to amend his complaint, the district court dismissed without prejudice.

III

We review de novo the district court’s dismissal of Oliver’s complaint for failure to state a claim on which relief can be granted. See Steckman v. Hart Brewing Inc., 143 F.3d 1293, 1295 (9th Cir. 1998). Limiting our review to the contents of the complaint, we affirm if Oliver can prove no set of facts in support of his claim which would entitle him to relief. See Tyler v. Cisneros, 136 F.3d 603, 607 (9th Cir. 1998).

IV

We first consider Oliver’s attempt to sue under ANCSA § 7(i). Because nothing in the text of the revenue-sharing provision creates an express private right of action to enforce the section’s mandates, Oliver must establish that an implied private right of action exists. See Touche Ross & Co. v. Redington, 442 U.S. 560, 562, 61 L. Ed. 2d 82, 99 S. Ct. 2479 (1979). “‘The fact that a federal statute has been violated and some person harmed does not automatically give rise to a private cause of action in favor of that person.'” Id. at 568 (quoting Cannon v. University of Chicago, 441 U.S. 677, 688, 60 L. Ed. 2d 560, 99 S. Ct. 1946 (1979)).

Whether to imply a private right of action is a matter of statutory construction, 442 U.S. at 568, which requires us to consider four factors:

First, is the plaintiff one of the class for whose especial benefit the statute was enacted, that is, does the statute create a federal right in favor of the plaintiff? Second, is there any indication of legislative intent, explicit or implicit, either to create such a remedy or deny one? Third, is it consistent with the underlying purposes of the legislative scheme to imply such a remedy for the plaintiff? And finally, is the cause of action one traditionally relegated to state law, in an area basically the concern of the States, so that it would be inappropriate to infer a cause of action based solely on federal law?

Cort v. Ash, 422 U.S. 66, 78, 45 L. Ed. 2d 26, 95 S. Ct. 2080 (1975) (citations and internal quotations omitted); Crow Tribe of Indians v. Campbell Farming Corp., 31 F.3d 768, 769 (9th Cir. 1994). If the first two factors do not support implying a private right of action, our inquiry ends. Touche Ross & Co., 442 U.S. at 575-76; see Crow Tribe, 31 F.3d at 770 (rejecting a sought implied right of action when the first two factors did not support the claim).

We accept the district court’s excellent analysis of the Cort factors in this case. The first Cort factor – whether ANCSA creates a federal right in favor of Oliver – supports Oliver’s claim of an implied private right of action. Section 7(j) requires Sealaska and CIRI to distribute 50 percent of the shared revenues under § 7(i) to shareholders like Oliver. The revenue-sharing and 50-percent-distribution requirements have the direct effect of providing dividends from the exploitation of natural resources to individual native shareholders. Oliver is a party for whose especial benefit § 7(i) & (j) was enacted. See Crow Tribe, 31 F.3d at 770 (noting that the explicit reference to individual Indians in the statutory section at issue suggested that the statute was enacted for the benefit of the individuals).

The second Cort factor – whether any indication exists of legislative intent to create or deny a private right of action under § 7(i) & (j) – does not support Oliver’s position. The only textual indications in the Act are to the contrary: ANCSA’s policy statement dictates that “the [Native Claims Settlement] should be accomplished rapidly, with certainty, in conformity with the real economic and social needs of Natives, without litigation,” 43 U.S.C. § 1601(b), and the only limitation period specified in the Act relates to potential suits by the State of Alaska against the United States, id. § 1609. When enacting ANCSA, Congress contemplated litigation, but did not provide for a private right of action to enforce § 7(i) & (j).

Because application of the first two Cort factors produces conflicting answers, we must address the third and fourth factors. See Touche Ross & Co., 442 U.S. at 577. The third factor – whether a private right of action is consistent with the underlying purposes of the legislative scheme – does not support Oliver’s position. Because, under § 7(j), Oliver and his fellow shareholders receive 50 percent of the revenues due to Sealaska and CIRI from the § 7(i) revenue sharing, financial benefit to Oliver follows from financial benefit to the corporations. CIRI and Sealaska have an identity of interest with Oliver. By protecting their rights, the individual Regional Corporations likewise protect the rights of their shareholders. Moreover, we again consider the stated policy of avoiding litigation from 43 U.S.C. § 1601(b) as compelling evidence that ANCSA’s general legislative scheme opposes individual rights of action.

Fourth, Oliver’s claim is one traditionally relegated to state law. As a shareholder, he has an opportunity, under Alaska law, to bring a derivative action on behalf of CIRI and Sealaska to remedy wrongs done to the corporation. See Hanson v. Kake Tribal Corp., 939 P.2d 1320, 1327 (Alaska 1997) (discussing the availability of a derivative action to remedy wrongs to a corporation). Furthermore, ANCSA mandates that the twelve Regional Corporations be organized “under the laws of Alaska,” 43 U.S.C. § 1606(d), underscoring the relevance of this fourth Cort factor in the instant case. Implying a private right of action under § 7(i) would usurp the state’s traditional authority in the realm of corporation law.

We hold that the Cort factors do not support implying a right of action in this case. Because no express right of action exists, Oliver and his purported class may not sue the twelve Regional Corporations under federal law to enforce the revenue sharing provisions of § 7(i) & (j).

V

We now address Oliver’s attempt to bring a direct suit against the twelve Regional Corporations under Alaska Statutes § 10.06.015. We agree with the district court and the defendant corporations that no Alaska-law basis exists for Oliver’s suit.

A. Direct Action Against Sealaska and CIRI

The Alaska Supreme Court permits a direct suit against a corporation in which a plaintiff owns stock under limited circumstances. Hanson, 939 P.2d at 1326-27. In Hanson, the plaintiffs alleged that the defendant corporation made discriminatory dividend distributions to a group of shareholders. Id. at 1322. The Alaska Supreme Court noted that, under Alaska law, the non-fiduciary shareholders were not liable to refund the improper dividends unless the plaintiff could establish the shareholders’ knowledge, at the time of the payments, that the payments were unlawful. Id. at 1327. Furthermore, the Hanson plaintiffs did not allege a harm to the corporation as a result of the discriminatory distributions. Id. Therefore, the only practical relief was in a direct action against the corporation itself. Id. at 1327, 1329.

In Hanson, the unavailability of any relief to the plaintiff was central to the court’s holding. Id. at 1327. In the case at bench, by contrast, a derivative suit on behalf of Sealaska and CIRI, the corporations in which Oliver owns shares, would provide an adequate remedy. Under the ANCSA revenue-sharing scheme, Oliver and his fellow shareholders are cumulatively entitled to 50 percent of the shared revenues received by CIRI and Sealaska, while the remaining 50 percent is an asset of the corporations. See 43 U.S.C. § 1606(j). Loss to Oliver coincides with a loss to one or both of his corporations. Oliver’s claim thus reduces to this: in the § 7(i) settlement, Sealaska and CIRI wrongfully contracted away their rights to receive revenues under § 7(i) – precisely the type of claim that a derivative action was meant to address. See Hanson, 939 P.2d at 1327 (“When a wrong has been done to the corporation, the shareholder’s right to sue the directors or wrongdoers for redress is derivative and not primary.” (internal quotations omitted)); Alaska Rule of Civil Procedure 23.1(a) (permitting a derivative suit on behalf of a corporation to procure a judgment in favor of the corporation).

Even if Oliver’s claim were one which the Alaska Supreme Court might recognize as fitting within the Hanson exception, Hanson couched the availability of a direct action in terms of the trial court’s discretion. 939 P.2d at 1328. The district court in the case at bench understood that it had discretion if the Hanson exception applied and specifically declined to exercise its discretion in light of the availability of a derivative suit. No abuse of discretion occurred in this case.

B. Direct Action Against the Ten Other Regional Corporations

Although a direct action by a shareholder against defendant corporations that deal with the shareholder’s corporation cannot generally be maintained, two exceptions exist: (1) if the plaintiff “suffered an injury separate and distinct from that suffered by other shareholders”; or (2) if “there is a special duty, such as a contractual duty, between the alleged wrongdoer” and the plaintiff. Hikita v. Nichiro Gyogyo Kaisha, Ltd., 713 P.2d 1197, 1199 (Alaska 1986).

Oliver does not allege a separate and distinct injury entitling him to sue directly. Moreover, his attempt to bring a class action implies that any injury he suffered is common to all Sealaska and CIRI shareholders. See Alaska Rule of Civil Procedure 23(a) (requiring commonality and typicality between the claims and questions of law or fact as a prerequisite to maintaining a class action). Likewise, Oliver fails to allege any special duty owed to him by any of the other ten Regional Corporations. Neither Hikita exception to the derivative suit requirement against corporations in which Oliver does not own shares is implicated in this case.

C. Statute of Limitation

Although we affirm the district court’s complete analysis regarding the unavailability of a direct cause of action for Oliver, we also note the applicable statute of limitation for a direct suit against Sealaska and CIRI. “The relationship between a corporation and its shareholders is primarily contractual,” and the six-year statute of limitation for contracts actions governs. Hanson, 939 P.2d at 1324 (citing Alaska Statutes § 09.10.050 & Trustees of Dartmouth College v. Woodward, 17 U.S. (4 Wheat) 518, 4 L. Ed. 629 (1819)). The § 7(i) settlement was approved by the (1819)). The § 7(i) settlement was approved by the district court for the District of Alaska on June 3, 1983, and Oliver filed the instant action on September 12, 1996 – more than thirteen years later. Although Oliver correctly argues that Hanson set the time of accrual for statute of limitation purposes at the time of an illegal action by the corporation, 939 P.2d at 1325, we reject his application of this rule to the instant fact pattern. Because the § 7(i) settlement provided for all subsequent yearly revenue distributions, any right of action to challenge the § 7(i) settlement accrued at the time of the supposedly illegal act – when the settlement was made.

VI

Because no private right of action exists under ANCSA § 7(i) & (j), and Alaska corporation law does not permit Oliver to bring a direct action against the twelve Regional Corporations to contest the § 7(i) settlement, Oliver’s complaint in this case does not state a claim on which relief can be granted.

AFFIRMED.

Bay View, Inc. v. United States

Bay View Inc. appeals the decision of the United States Court of Federal Claims dismissing its complaint. Bay View had complained that the 1995 amendment of the Alaska Native Claims Settlement Act (ANCSA) was a taking, a breach of trust, and a breach of contract. Bay View, Inc. v. United States, 46 Fed. Cl. 494 (2000). The Court of Federal Claims dismissed the taking and breach of contract claims for failure to state a claim, and dismissed the breach of trust claim for lack of jurisdiction. Id. Because Bay View, Inc. had no vested property interest in the Regional Corporations’ revenue from sales of net operating loss deductions and the ANCSA created neither a trust nor a contractual relationship between the United States and the Alaska natives, this court affirms.

BACKGROUND

The Alaska Native Claims Settlement Act, Pub. L. No. 92-203, 85 Stat. 688 (Dec. 18, 1971), codified at 43 U.S.C. §§ 1601-1629 (1994 & Supp. III 1997), extinguished all claims of aboriginal title in Alaska. ANCSA divided Alaska into twelve geographic regions and established a native-owned Regional Corporation for each. ANCSA also established about 220 Village Corporations, one for each native village entitled to receive land and funds under ANCSA. Then ANCSA gave the Village Corporations the surface estates of about 22 million acres of land. ANCSA gave the Regional Corporations 16 million acres of land in fee as well as the subsurface estates and timber rights for the 22 million acres of the Village Corporations. Bay View is a Village Corporation.

43 U.S.C. § 1606(i) required each Regional Corporation to share with the other Regional Corporations “all revenues received by each Regional Corporation from the timber resources and subsurface estate patented to it pursuant to this Act.” Section 1606(j) required each Regional Corporation to share with the Village Corporations in the region a percentage (45% for the first five years and 50% thereafter) of its income from certain sources, including revenues received under § 1606(i).

The tax basis for the land or interests in land, such as timber, was set at the “fair value of such land or interest in land at the time of receipt.” 43 U.S.C. § 1620(c) (1994 & Supp. III 1997). Accordingly, the tax basis for the native corporations’ (Regional and Village Corporations’) assets were set in the early 1970’s when they received the assets. The 1984 Deficit Reduction Act (DEFRA) exempted the native corporations from DEFRA’s ban on sales of net operating loss (NOL) deductions. When native corporations sold their natural resources in the 1980’s, they often incurred operating losses because the value of those resources had decreased between the early 1970’s and the 1980’s. The native corporations sold these NOLs to profitable private corporations. The private corporations typically paid the native corporations about $ 30 for a $ 100 loss. These sales continued until 1988, when the law changed to forbid further NOL sales by native corporations. See Technical and Miscellaneous Revenue Act of 1988, Pub. L. 100-647, § 5021, 102 Stat. 3342, 3666 (1988).

None of the Regional Corporations included the revenues received from NOL sales in revenue sharing distributions. In 1995, Bay View filed a class action suit in the District of Alaska seeking to compel the Regional Corporations to share the NOL proceeds. The district court dismissed the action, holding that the Village Corporations could not enforce the ANCSA provision against the Regional Corporations. Bay View, Inc. v. Ahtna, Inc., Civ. No. 94-551 (D. Alaska, July 7, 1995). While Bay View’s appeal to the United States Court of Appeals for the Ninth Circuit was pending in 1995, Congress amended § 1606. This new section (i)(2) expressly states that “revenues” under § 1606 do not include benefits received from “losses incurred” by a Regional Corporation. In other words, the new § 1606(i)(2) clarified that the Regional Corporations do not have to share NOL proceeds. The Ninth Circuit affirmed based on the 1995 amendment, noting that the new § 1606(i)(2) was fully retroactive. Bay View, Inc. v. Ahtna, Inc., 105 F.3d 1281, 1284 (9th Cir. 1997).

Bay View then filed an action against the United States in the Court of Federal Claims alleging that the 1995 amendment was a taking, a breach of trust, and a breach of contract. Bay View argued that the 1995 amendment to section 1606(i) of ANCSA was a compensable taking under the Fifth Amendment. Specifically, Bay View contended that it had compensable vested rights in the Regional Corporations’ revenue from the NOL sales under the provisions of ANCSA. Bay View considers NOL revenue a sharable asset arising from natural resources under ANCSA.

The Court of Federal Claims held that the amendment was not a taking because the revenues received from NOL sales were not revenues “from the timber resources and subsurface estate.” It further held that ANCSA did not create a trust relationship mandating a payment of money for breach of trust. Finally, the Court of Federal Claims held that ANCSA was not a contract or a treaty. Even if ANCSA was a contract or treaty, the trial court reasoned, the United States committed no breach because the Regional Corporations had never had an obligation to share NOL revenues. Accordingly, the Court of Federal Claims dismissed the taking and breach of contract claims for failure to state a claim and dismissed the breach of trust claim for lack of jurisdiction. Bay View timely appealed to this court, which has exclusive appellate jurisdiction. 28 U.S.C. § 1295(a)(3) (1994).

DISCUSSION

This court reviews a dismissal for failure to state a claim without deference. Highland Falls-Fort Montgomery Cent. Sch. Dist. v. United States, 48 F.3d 1166, 1170 (Fed. Cir. 1995). A plaintiff fails to state a claim upon which relief could be granted if the plaintiff cannot assert a set of facts that would support its claim. Id. In reviewing the Court of Federal Claims’ grant of such a motion, this court assumes that all well-pled factual allegations are true and resolves all reasonable inferences in favor of the nonmovant. Id. This court also reviews without deference the Court of Federal Claims’ grant of a motion to dismiss for lack of jurisdiction. JCM, Ltd. v. United States, 210 F.3d 1357, 1359 (Fed. Cir. 2000). “Whether a taking compensable under the Fifth Amendment has occurred is a question of law based on factual underpinnings.” Bass Enter. Prod. Co. v. United States, 133 F.3d 893, 895 (Fed. Cir. 1998). “In the absence of factual disputes, the question of contract formation is a question of law, reviewable de novo.” Trauma Serv. Group v. United States, 104 F.3d 1321, 1325 (Fed. Cir. 1997).

I. 

In a takings analysis, a court first determines whether the plaintiff possesses a valid interest in the property affected by the governmental action, i.e., whether the plaintiff possesses a “stick in the bundle of rights.” If a plaintiff possesses a compensable property right, a court proceeds to determine whether the governmental action at issue constitutes a taking of that “stick.” Karuk Tribe of Cal. v. Ammon, 209 F.3d 1366, 1374 (Fed. Cir. 2000) (citing M & J Coal Co. v. United States, 47 F.3d 1148, 1154 (Fed. Cir. 1995)).

Under ANCSA, a Regional Corporation must share revenue “received . . . from the timber resources and subsurface estate patented to it pursuant to this act.” 43 U.S.C. § 1606(i)(1994 & Supp. III 1997)(emphasis added). Thus, Bay View’s entitlement to compensatory property in this case depends on whether the money received by Regional Corporations from NOL sales was “from” the underlying timber resources within the meaning of the statute.

In a distant sense, the NOL proceeds have some connection to the timber resources. Specifically, the sale of the resources generated NOLs; the subsequent sale of NOLs produced these proceeds. The sale of the NOLs themselves, however, is a separate business transaction without any direct relationship to the tangible resources patented to the Regional Corporations. The Regional Corporation realized revenue from sale of NOLs because they found buyers and successfully negotiated sales of these intangible financial interests. The NOLs only existed in the first place because the Regional Corporations enjoyed a favorable tax status. Accurately characterized, the NOL proceeds are a product of the tax status of the Regional Corporations, not the product of timber resources. Thus, applying the terms of ANCSA, the NOL sales generated revenues from sales of financial interests related to tax status, not from tangible timber or mineral estates.

Stated in other words, private corporations that purchased NOLs from the Regional Corporations did not acquire any interest in timber or subsurface estates. Rather, these private corporations paid for the right to consolidate their tax returns with the Regional Corporations to reduce their own tax liability. Thus, the Court of Federal Claims determined correctly that NOL proceeds do not constitute “revenues . . . from the timber resources and subsurface estate.”

Some forms of legislative history supply insights into the meaning of enactments. While statements of a single legislator rarely reflect the will of the entire Congress, a joint statement of a conference committee more often reflects the joint will of each house of Congress. In this case, the Joint Statement of the Committee of Conference for ANCSA discusses the sharing of revenues between the Regional Corporations and the Village Corporations: “This provision does not apply to revenues received by the Regional Corporations from their investment in business activities.” Conf. Rep. No. 92-746, 92nd Cong. 1st Sess. (1971), 1971 U.S.C.C.A.N. 2247, 2249 (emphasis added). This language suggests that the preposition “from” in § 1606(i) does not embrace financial and business revenues beyond those received directly from natural resources.

This statement in the Joint Statement refers to § 1606(j), not § 1606(i). However, § 1606(j) expressly applies to income received “under subsection (i) (revenues from the timber resources and subsurface estate patented to it pursuant to this Act).” (Emphasis added.) In this case, the NOL generated revenue for the Regional Corporations based on business dealings with profitable corporations, not directly from the sale of natural resources. Thus, the NOL revenue is not “from” the timber resources and subsurface estates within the meaning of § 1606(i)-(j). Consequently, ANCSA does not support an expansive meaning of “all revenues from” to comprehend “all economic benefit derived” from the natural resources.

In sum, Bay View does not possess a compensable property right in the Regional Corporations’ revenue from the NOL sales. Thus, this court need not assess whether the United States took that interest in the 1995 amendment. Accordingly, the 1995 amendment to section 1606(i), exempting NOL revenues from the Act’s sharing requirement, did not take private property from Bay View for a public purpose.

II.

In United States v. Mitchell, 463 U.S. 206, 226, 77 L. Ed. 2d 580, 103 S. Ct. 2961 (1983), the Supreme Court held that a plaintiff claiming a breach of fiduciary duty must identify a statute that creates a trust relationship and mandates the payment of money for damages stemming from the breach of that trust relationship. Where statutes “clearly establish fiduciary obligations of the Government in the management and operation of Indian lands and resources, they can fairly be interpreted as mandating compensation by the Federal Government for damages sustained.” Id. Moreover, if the Government “takes on or has control or supervision over tribal monies or properties, the fiduciary relationship normally exists with respect to such monies or properties (unless Congress has provided otherwise) even though nothing is said expressly in the authorizing or underlying statute (or other fundamental document) about a trust fund, or a trust or fiduciary connection.” Id. at 225.

In considering a claim that the United States breached fiduciary duties by violating the land selection rights under ANCSA, this court has previously stated:

The text and legislative history of the ANCSA make clear that Congress sought to avoid creating any fiduciary relationship between the United States and any Native organization. See 43 U.S.C. § 1601(b);S. Rep. No. 92-405, at 108 (1971). Moreover, there is no provision of the ANCSA that mandates the payment of money for failure to carry out the provisions of the statute. Accordingly, we agree with the Court of Federal Claims that it lacked jurisdiction over Seldovia’s breach of fiduciary duty claims.

Seldovia Native Ass'n v. United States, 144 F.3d 769, 784 (Fed. Cir. 1998).

In reaching its decision to dismiss Bay View’s complaint for lack of subject matter jurisdiction, the Court of Federal Claims found that Bay View’s breach of trust claim did not satisfy the requirements set out by Mitchell. Bay View, 46 Fed. Cl. at 498. Indeed the trial court correctly determined that no trust relationship arose between the United States and the Alaska natives because the United States restricted alienation of stock ownership in the native corporations. The actions of the United States did not assert control or supervision over tribal money or property. The United States did not receive, hold, or disburse any revenues received by the native corporations. Thus, the United States has not acted in the capacity of a trustee for the native corporations’ revenues or breached any fiduciary duties. Accordingly, as this court previously held in Seldovia, ANCSA did not create a trust relationship between the United States and the Alaska natives or any substantive right enforceable against the United States for money damages.

III.

“Any agreement can be a contract within the meaning of the Tucker Act, provided that it meets the requirements for a contract with the Government, specifically: mutual intent to contract including an offer and acceptance, consideration, and a Government representative who had actual authority to bind the Government.” Trauma Serv. Group v. United States, 104 F.3d 1321, 1326 (Fed. Cir. 1997). “An implied-in-fact agreement must be founded upon a meeting of the minds, which, although not embodied in an express contract, is inferred, as a fact, from conduct of the parties showing, in the light of the surrounding circumstances, their tacit understanding.” Id.

In this case, the only alleged contract is ANCSA itself. Because ANCSA does not purport to create an express contract between the United States and Bay View, the record of ANCSA’s enactment would have to support an implied contract. Although it extinguished aboriginal title to land and, at the same time, gave the United States some rights to share in resource exploitation, ANCSA does not meet the requirements for a contract. For instance, ANCSA evinces no offer from the Alaska natives accepted by United States with ample consideration to show a contractual agreement. The Alaska natives participated in the legislative process leading up to ANCSA, but nothing in the Act or its enactment history suggests that they made a specific offer to the United States. Nor does the Act or the record show that the United States made a specific defined offer to the natives. Neither alleged contractual party accepted these nonexistent offers. Rather ANCSA, while seeking to “settle” aboriginal claims, was a unilateral act by the United States. Accordingly, ANCSA is not a contract between the United States and the Alaska natives (or native corporations such as Bay View).

CONCLUSION

The Court of Federal Claims correctly determined that Bay View had no vested property interest in the Regional Corporations’ revenue from the NOL sales and that the ANCSA created neither a trust nor contractual relationship between the United States and the Alaska natives. Therefore, the trial court did not err in dismissing Bay View’s complaint.

COSTS

Each party shall bear its own costs.

AFFIRMED 

Bodkin v. Cook Inlet Region, Inc.

I. INTRODUCTION

Eleanor Bodkin and Maria Coleman, shareholders of Cook Inlet Region, Inc. (CIRI), appeal the superior court’s dismissal of their challenge to (1) the legality of CIRI’s payments to “original” shareholders over the age of sixty-five under the Alaska Native Claims Settlement Act (ANCSA) and Alaska state law, and (2) the constitutionality of ANCSA to the extent that it preempts state law in order to permit these payments. Because the plain language of ANCSA authorizes CIRI’s distributions to elder shareholders, and because Bodkin and Coleman’s constitutional claims lack a sound legal basis, we uphold the superior court’s judgment.

II. FACTS AND PROCEEDINGS

In 1971 Congress passed the Alaska Native Claims Settlement Act, 43 U.S.C. §§ 1601 et seq., “to achieve a fair and just settlement of all aboriginal land [in Alaska] . . . with maximum participation by Natives in decisions affecting their rights and property.”[1] Toward that end, the Act established twelve in-state Native regional corporations to hold land and capital on behalf of Alaska Native shareholders.[2] “Except as otherwise expressly provided,” the Act gives these shareholders “all rights of a shareholder in a business corporation organized under the laws of the State.”[3] In 1987 Congress amended ANCSA to give each regional corporation the authority to establish settlement trusts “to promote the health, education, and welfare of its beneficiaries and preserve the heritage and culture of Natives.”[4] A 1998 amendment “expressly authorized and confirmed” the regional corporations’ authority to pursue those objectives.[5] It further stipulated that “such benefits need not be based on share ownership in the Native Corporation and such benefits may be provided on a basis other than pro rata based on share ownership.”[6]

CIRI is an Alaska Native regional corporation organized under ANCSA. In February 2000 the CIRI board of directors passed a resolution creating the “Elders’ Benefit Program.” The program established a revocable trust that provided quarterly payments of $ 450 to any shareholder aged sixty-five or older who received shares in CIRI as an original enrollee. The Board determined that the program did not require a shareholder vote. Shortly after the Board established the program, Emil Notti, a CIRI shareholder who did not qualify for benefits, filed suit. CIRI removed the case from superior court to the United States District Court for the District of Alaska.

The district court granted summary judgment in CIRI’s favor. It upheld the validity of the Elders’ Benefit Program because “[s]tate law authorizes ANCSA corporations to take any action authorized by ANCSA” and “ANCSA [§ 7(r)] permits preferential distributions.” The Ninth Circuit Court of Appeals affirmed, reasoning that “[t]he plain language of § 7(r) allows CIRI to make the distributions made in this case.”[7] The United States Supreme Court denied certiorari.[8]

In the meantime, federal tax reforms led CIRI’s board of directors to favor replacing the Elders’ Benefit Program with an irrevocable trust, titled “The Elders’ Settlement Benefit Trust.” Pursuant to ANCSA, 43 U.S.C. §§ 1629b(a)(3) & (b)(1), the Board passed a resolution to establish the trust and then sought the approval of a majority of its shareholders. In April 2003 the corporation distributed a Voter’s Guide and Supplemental Proxy Statement detailing the proposed trust. These materials explained that the trust would cause “CIRI’s assets [to] decline by . . . $ 16 million, or about 2.1% of the book value of [2002] assets” and outlined several “risk factors” that could lead a shareholder to vote against the proposal. At the corporation’s June 7, 2003 annual meeting, CIRI obtained majority shareholder approval to implement the trust. On September 2, 2003, CIRI registered the trust with the superior court.

On May 8, 2003, Eleanor Bodkin filed this suit in superior court against CIRI. Her complaint purported to state five “major claims,” the “most urgent” of which challenged CIRI’s proxy materials as “not provid[ing] adequate disclosure to the rank-and-file shareholders.” Appellant Maria Coleman joined Bodkin in an amended class action complaint filed on January 26, 2004, after the CIRI shareholders approved the trust. The amended complaint repeated allegations that the CIRI April 2003 proxy “did not provide adequate disclosure” and that the Elders’ Benefit Program and the trust illegally discriminated among shareholders. On March 8, 2004, CIRI moved to dismiss for failure to state a claim upon which relief could be granted. The corporation argued that ANCSA expressly permits the benefit programs and that its proxy statement contained no material misstatements or omissions. CIRI also filed a motion for sanctions under Alaska Civil Rules 11 and 95, alleging that Bodkin and Coleman’s counsel, who had also represented Emil Notti in his lawsuit regarding the same issues, had “no reasonable excuse for his conduct in signing and submitting a [c]omplaint that is not well-grounded in law or fact.”

Bodkin and Coleman requested an extension of time to respond to CIRI’s motion to dismiss, and the superior court granted that request. Bodkin and Coleman used this time to amass an opposition memorandum of 150 pages, which included a cross-motion for partial summary judgment. The superior court refused to consider the summary judgment motion until after the court resolved CIRI’s motion to dismiss. Similarly, it stated its intention to postpone hearing “arguments on the other ripe motions,” including Bodkin and Coleman’s motion for class certification. Nevertheless, Bodkin and Coleman persisted in filing a “reply” to follow up on their cross-motion for partial summary judgment. CIRI filed a motion challenging Bodkin and Coleman’s “reply” as premature since it had yet to file its response to Bodkin and Coleman’s motion for summary judgment, and would not need to do so until after the court considered the Civil Rule 12(b)(6) motion.

The superior court eventually heard oral argument on CIRI’s motion to dismiss on July 28, 2004, and on September 24, 2004, the lower court issued its decision dismissing Bodkin and Coleman’s suit. The superior court’s opinion notes that “several courts have rejected [Plaintiffs’] same or similar claims.” Specifically, the opinion cites our decision in Sierra v. Goldbelt, Inc[9] and the Ninth Circuit’s decision in Broad v. Sealaska Corp.[10] for the proposition that ANCSA allows “distributions to subsets of shareholders.” In addition to the case law, the superior court relied on § 7(r)‘s express language, which stipulates that benefits “need not be based on share ownership.”[11]

The superior court further buttressed its decision with evidence from ANCSA’s legislative history. The congressional record directly addresses the “benefits” permitted under § 7(r):

Examples of the type of programs authorized include: scholarships, cultural activities, shareholder employment opportunities and related financial assistance, funeral benefits, meals for the elderly and other elders[‘] benefits including cash payments, and medical programs.[12]

The superior court therefore concluded that “Congress intended to provide for cash distributions” and that “ANCSA authorizes the Elders’ Benefit Program and Elders’ Settlement Trust.”

The superior court refused to exercise jurisdiction over Bodkin and Coleman’s constitutional “taking” challenge to CIRI’s benefit programs, reasoning that “[i]f the plaintiffs have a claim for taking their property, they must assert that claim against the U.S. government which authorized the statute.” The court went on to reject the rest of Bodkin and Coleman’s constitutional claims — including their assertion that CIRI’s benefit programs deny them equal protection under the law. The court reasoned that the constitution “protects individuals from state action but not from deprivations by private actors.” Because CIRI “is not a governmental agency,” the superior court concluded that Bodkin and Coleman could not succeed on these claims.

Finally, the superior court disposed of Bodkin and Coleman’s allegations regarding the adequacy and accuracy of CIRI’s proxy materials. The court found that “CIRI’s proxy materials provided accurate and complete information regarding the impact of the settlement trust on the corporation and the individual shareholder.” Addressing Bodkin and Coleman’s argument that CIRI should have included estimates of the programs’ impact on individual share prices, the superior court pointed out that their objection failed to recognize the complexity of stock price valuation, especially where “shares may not be bought or sold on the open market.” Similarly, the court dismissed Bodkin and Coleman’s claim that CIRI’s “proxy materials are misleading or not useful because the font size is too small,” reasoning that “[n]othing about the font size would lead a shareholder to disregard the proxy materials.”

Following the court’s ruling, Bodkin and Coleman submitted a motion for reconsideration, which was denied. Bodkin and Coleman appeal.

III. STANDARD OF REVIEW

We review de novo a superior court’s dismissal of a complaint pursuant to Alaska Civil Rule 12(b)(6).[13] This same review applies to constitutional issues and any other questions of law.[14] We review a lower court’s discovery rulings and its decision to expressly exclude material beyond Rule 12(b)(6) pleadings for abuse of discretion.[15]

IV. DISCUSSION

Bodkin and Coleman present three issues for review. First, Bodkin and Coleman argue that the superior court erred in excluding extrinsic evidence that they sought to submit with their opposition to CIRI’s motion to dismiss. Second, they claim that ANCSA does not authorize CIRI’s benefit program and trust. Finally, they argue that even if ANCSA does authorize the benefit program and trust, the distributions qualify as “government action” giving rise to constitutional claims.

A. The Superior Court Did Not Abuse Its Discretion in Declining To Consider Additional Evidence Presented by Bodkin and Coleman Prior to Granting Appellee’s Rule 12(b)(6) Motion.

Bodkin and Coleman argue that the superior court erred in declining to convert CIRI’s motion to dismiss to a motion for summary judgment. They contend that the evidence that they sought to submit with their opposition to the motion to dismiss would have entitled them to relief if the superior court had considered the motion as one for summary judgment. This evidence includes CIRI’s “admissions” about its elders’ benefit programs, as well as proffered expert testimony on the CIRI proxy materials. We must decide whether the lower court abused its discretion in excluding this “material beyond the pleadings . . . offered in conjunction with a Rule 12(b)(6) motion.”[16]

We hold that it did not. Bodkin and Coleman’s brief sheds no further light on the importance of their proffered expert testimony and devotes scant attention to the adequacy of CIRI’s proxy materials in general. We have held before that “where a point is given only a cursory statement in the argument portion of a brief, the point will not be considered on appeal.”[17] In their sixty-nine-page brief with its various tables and over fifty footnotes, Bodkin and Coleman limit their analysis of the proxy materials to passing remarks contained within two sentences and a footnote on a single page. Bodkin and Coleman’s reply brief ignores the proxy materials issue altogether. Thus, without some elaboration on how their expert testimony bears on the proxy issue in their complaint, Bodkin and Coleman fail to convince us that the superior court abused its discretion in excluding that testimony.

Bodkin and Coleman similarly fail to persuade us that the superior court abused its discretion in rejecting such other materials as CIRI’s “admissions” about its elders’ benefit programs, which they sought to submit with their opposition to CIRI’s motion to dismiss.[18] For the most part, the “factual disputes” that Bodkin and Coleman cite seem neither factual nor disputed. For example, references in CIRI’s corporate statements to the elders’ benefit payments as “distributions” or “dividends” do not alter our analysis of whether CIRI’s quarterly cash payments to original stockholders over the age of sixty-five violated ANCSA. Bodkin and Coleman cite other purportedly “disputed issues of fact,” including the number of elders receiving benefits, or how much the program costs on a per share basis, but again they fail to explain how these issues relate to their claims.

B. The Superior Court Correctly Held that ANCSA Expressly Authorizes CIRI’s Elders’ Benefit Program and Elders’ Settlement Benefit Trust, Thereby Preempting Alaska Law.

When Congress amended ANCSA in 1998, it “expressly authorized” each regional corporation to distribute “benefits” in order to “promote the health, education, or welfare” of its beneficiaries.[19] This amendment, contained in ANCSA § 7(r), further stipulates that “such benefits need not be based on share ownership in the Native Corporation and such benefits may be provided on a basis other than pro rata based on share ownership.”[20]

Bodkin and Coleman argue that § 7(r)‘s authorization of “benefits” does not extend to the cash distributions that CIRI has paid out in its elders’ benefit program and trust. They contend that “[i]n modern parlance, ‘benefits’ refers to governmental or institutional grants of charitable aid, assistance, or welfare [and the term] is not used to mean corporate distributions or dividends.” When pressed by the superior court to elaborate on the term’s meaning, Bodkin and Coleman indicated that “the statute [is] limited to providing benefits by need only. . . . It means some demonstrable need. That’s what the language [used] in 7(r) means.”

But the legislative history behind § 7(r) casts doubt upon this characterization. On the floor of the Senate, Senator Frank Murkowski urged passage of the ANCSA amendment. He also noted that “[e]xamples of the type of programs authorized [by § 7(r)] include: scholarships, cultural activities, shareholder employment opportunities and related financial assistance, funeral benefits, meals for the elderly and other elders[‘] benefits including cash payments, and medical programs.”[21] Bodkin and Coleman dismiss that legislative history, however, as containing little more than Senator Murkowski’s statement, which they urge us to ignore. Bodkin and Coleman assert that the plain meaning of “benefits” cannot include what CIRI’s own promotional literature characterizes as “dividends.” According to Bodkin and Coleman, these terms are mutually exclusive. We disagree.

As the superior court pointed out, we have previously considered an argument closely akin to the one Bodkin and Coleman advance in this appeal. In Sierra v. Goldbelt, Inc., we considered whether Goldbelt, Inc., another Native regional corporation, could issue shares to original shareholders over the age of sixty-five.[22] In upholding Goldbelt’s share issuance, we looked to Congress’s intent and concluded that “Native corporations must have broad discretion to fashion elder benefit programs that meet the needs of elders.”[23] We made note of certain restrictions that do apply to Native regional corporation distributions. For example, a Native regional corporation may not define “classes of beneficiaries . . . by reference to place of residence, family, or position as an officer, director, or employee of a Native Corporation.”[24] We clarified, however, that ANCSA permits limiting beneficiaries to “elders who owned original shares of stock.”[25]

Here, Bodkin and Coleman advance no principled basis for distinguishing Goldbelt. They emphasize “the qualitative difference between the issuance of corporate stock . . . and discriminatory cash payments.” According to Bodkin and Coleman, the issuance of stock “institutionalizes the ownership interest of original shareholders in the corporation, but cash payments do not.” Yet the Goldbelt board agreed to redeem the shares they issued to elders at a fixed price, and elders received the equivalent of $ 1,000.[26] Thus, for many elders, the Goldbelt program differed only in its form and duration from CIRI’s quarterly cash distributions. Bodkin and Coleman fail to assemble any support from the relevant statutory text, legislative history, or case law to distinguish our holding in Goldbelt from the case at hand.[27]

C. The United States Constitution Does Not Afford Bodkin and Coleman Any Relief from this Court.

Bodkin and Coleman argue alternatively that if ANCSA’s provisions “could be used as CIRI interprets and applies them — these statutes would violate the Fifth Amendment.” In addition to claiming an unconstitutional taking of their property, Bodkin and Coleman contend that authorizing CIRI’s elders’ benefit programs interferes with other constitutional rights, including “equal protection to similarly situated but excluded shareholders” and “due process,” because the programs “impos[e] retroactive liability on the excluded shareholders.” Bodkin and Coleman further assert that CIRI’s interpretation and application of ANCSA “extinguish the excluded shareholders’ vested contractual right to equal distributions.”

Bodkin and Coleman must pursue their takings claim against the federal government in the United States Court of Federal Claims. The federal Tucker Act[28] vests that court with “jurisdiction to render judgment upon any claim against the United States founded either upon the Constitution, or any Act of Congress.”[29] Addressing a similar takings claim involving the same benefit programs at issue here, the Ninth Circuit declined to exercise jurisdiction “because appellants must raise that claim under the Tucker Act in the Federal Court of Claims.”[30] Federal case law makes clear that Bodkin and Coleman’s takings claim is premature until they have first presented a claim for compensation pursuant to the Tucker Act.[31] The superior court thus correctly ruled that it lacked jurisdiction over those claims.

The superior court concluded that Bodkin and Coleman’s other constitutional claims fail for lack of state action. As the superior court noted, the Ninth Circuit rejected similar constitutional claims on this basis in Broad v. Sealaska.[32] CIRI argues persuasively that we should bypass any consideration of Bodkin and Coleman’s constitutional claims on the merits and affirm the superior court on alternative jurisdictional grounds because the ANCSA Amendments of 1987[33] provide that “the United States District Court for the District of Alaska shall have exclusive original jurisdiction” over constitutional challenges to ANCSA.[34] Bodkin and Coleman address this argument with a single sentence in their reply. Citing Louisville & Nash Railroad Co. v. Mottley[35] and Merrel Dow Pharmaceuticals, Inc. v. Thompson,[36] they argue that “[t]he federal court does not have jurisdiction of this case because the federal question is brought in by way of defense, not as part of plaintiffs’ case in chief.” But this argument is not responsive to CIRI’s jurisdictional challenge, given that Bodkin and Coleman rely on the Fifth Amendment to challenge the legality of CIRI’s elders’ benefit programs.

In any event, we need not decide this jurisdictional question, which was not addressed by the superior court, because it is unnecessary to rely on an alternative ground to affirm the superior court’s decision. We see no error in the superior court’s ruling on the merits of Bodkin and Coleman’s constitutional claims. As the Ninth Circuit concluded in Broad, the federal government’s mere authorization of a Native corporation to create an elders’ benefit trust does not implicate the Fifth Amendment.[37] Bodkin and Coleman fail to advance any basis for differentiating between CIRI’s distributions and those of the Sealaska Corporation that were at issue in Broad.[38] Applying the same factors that led the Ninth Circuit to conclude that Sealaska’s elders’ benefit programs were not state action, we agree that Bodkin and Coleman’s constitutional claims must fail for lack of state action.

V. CONCLUSION

For the reasons detailed above, we AFFIRM the judgment of the superior court.

Katairoak v. State, Department of Revenue, Child Support Services Division

MEMORANDUM OPINION AND JUDGMENT[*]

I. INTRODUCTION

A father appeals two separate superior court orders allowing the Department of Revenue’s Child Support Services Division (CSSD) to attach his Alaska Native Claims Settlement Act (ANCSA) corporate stock dividends for child support arrears. He argues that: (1) the superior courts improperly attached his ANCSA stock dividends through summary judgment; (2) the courts should have ordered CSSD to first engage in alternative dispute resolution; and (3) CSSD improperly imputed income to him for a period of time in one of his cases. Because the superior courts did not err, we affirm both orders in this consolidated decision.

II. FACTS AND PROCEEDINGS

Jesse Katairoak, Sr. is the father of two minor children with different mothers. In 2011 CSSD served Katairoak separate administrative child support orders for the two children. Because Katairoak was incarcerated he was ordered to pay the minimum child support amount of $50 per month to each custodial parent.[1] Katairoak does not dispute that he is in arrears.

Although Katairoak has been incarcerated for most of his children’s lives, he was out of prison between December 2012 and May 2014. In January 2014 CSSD administratively modified Katairoak’s support obligation for only his younger child, increasing his monthly obligation to $240 as of November 2013. CSSD calculated his obligation “[b]ased on AK Min wage and PFD,” effectively imputing income to him. This modification was allegedly mailed to Katairoak in February 2014 and remained in effect until a new modification order reducing his monthly support obligation back to the $50 minimum was issued in September 2015, almost 16 months after Katairoak had been re-incarcerated. Katairoak claims that he did not receive notice of the 2014 modification.

In February 2016 CSSD filed separate petitions in superior court to attach Katairoak’s Arctic Slope Regional Corporation (ASRC) stock dividends and future Permanent Fund Dividends to pay child support arrears owed to his children’s custodial parents. CSSD soon thereafter filed summary judgment motions before the two different superior court judges. After Katairoak opposed CSSD’s petitions and summary judgment motions, both superior courts granted CSSD’s summary judgment motions in May 2016. Katairoak—self-represented—appeals both orders. We consolidated the appeals for this decision.[2]

III. STANDARD OF REVIEW

“We review grants of summary judgment de novo.”[3]

IV. DISCUSSION

Katairoak primarily argues that the superior courts erred by granting summary judgment to attach his ASRC stock dividends to pay his child support arrears. He also argues that the courts should have first ordered the parties to engage in alternative dispute resolution.

Katairoak does not dispute that he is in arrears and makes no showing that his ASRC stock dividends were attached illegally.[4] He also cites no law requiring CSSD to attempt to resolve his child support arrears through alternative dispute resolution prior to attaching his ASRC stock dividends.[5] We therefore affirm the superior courts’ orders granting summary judgment.

Katairoak also argues that CSSD erred in administratively modifying his child support obligation in 2014 for his youngest child. To the extent Katairoak argues he was not given notice of CSSD’s 2014 child support modification or that he was improperly imputed income, those issues are not properly before us, and, in any event, we do not have sufficient evidence in the record to determine whether notice was proper.[6] If Katairoak wants to contest CSSD’s 2014 modification he may seek relief directly from CSSD.[7]

V. CONCLUSION

We AFFIRM the superior courts’ orders granting summary judgment in favor of CSSD.

 

Sierra v. Goldbelt, Inc.

I. Introduction

Did the Alaska Native Claims Settlement Act (ANCSA)[1] permit Goldbelt, Inc., a Native corporation, to issue shares to particular groups of Native elders without consideration? And if it did, did Goldbelt satisfy its disclosure duty in the proxy statement that solicited votes for the elder benefit program? As to the first issue, this court unanimously holds that ANCSA authorizes issuance of such shares. As to the second issue, the four participating members of the court are equally divided, and the court therefore affirms the superior court’s judgment granting complete summary judgment to Goldbelt.

II. Facts and Proceedings

Goldbelt, Inc. was incorporated in 1974 as an ANCSA-authorized urban corporation with a single class of authorized capital stock. In 1987 Congress amended ANCSA to allow regional corporations to amend their articles of incorporation to authorize the issuance and redemption of new and different classes of stock that could be restricted to “Natives who have attained the age of sixty-five” and “other identifiable groups of Natives … defined in terms of general applicability and not in any way by reference to place of residence or family.”[2] These provisions also applied to village and urban corporations.[3] Any proposed amendment to the articles of incorporation approved by the corporation’s board of directors must be approved by the shareholders.[4]

In a 1994 advisory vote, a majority of Goldbelt shareholders who voted indicated that they favored an elder benefit program that would provide not less than $1,000 per elder. In 1995 a proposed amendment to the articles of incorporation that would have authorized a new class of stock for elders was not approved by a majority of the shareholders. Contemporaneously proposed amendments that would have authorized issuing stock to new Natives and to Natives who were left out of the original settlement also failed.

In 1996 Goldbelt again sought to amend its articles of incorporation to authorize issuing preferred stock to elders who owned original Goldbelt stock. This time the corporation focused solely on the elders’ benefit and did not pursue benefits for new Natives or for those who had been left out.[5] The board passed a resolution that approved an amendment to authorize issuance of 100 shares of elder stock to each Native who “has attained the age [of] 65 or more and who holds Settlement Common Stock that was not acquired through gift, inheritance or purchase or who transferred such Settlement Common Stock by inter vivos gift.”

The resolution provided, in part:

WHEREAS, the amendments to the Alaska Native Claims Settlement Act permit the corporation to amend its articles of incorporation in order to provide benefits to elders in the form of additional stock other than Settlement Common Stock; and

WHEREAS, the Board of Directors does not wish to create a Settlement Trust, but instead wishes to establish the authority to issue additional preferred stock to elders in accordance with the terms of the 1991 Amendments to the Alaska Native Claims Settlement Act; and

WHEREAS, the preferred stock shall be issued to elders and redeemed on such terms as are authorized by 43 U.S.C. § 1606(g)(2) and at such times and on such terms as the Corporation determines to be consistent with sound fiscal management; and

WHEREAS, the preferred stock shall be redeemable and the Board of Directors anticipates that the redemption price will be $10.00 per share so that each elder to whom 100 shares are issued would be entitled to a payment of $1,000.00,

NOW, THEREFORE, BE IT RESOLVED, that the Board of Directors approves the following amendment to the articles of incorporation of the corporation and directs that the amendment be submitted to a vote of the shareholders at the next annual meeting, with a recommendation that the shareholders approve the amendment:

AMENDMENT TO ARTICLE IV of the Restated Articles of Incorporation of Goldbelt, Incorporated.

ARTICLE IV is hereby amended to read as follows: ….

C. The Corporation shall be authorized to issue 400,000 shares of Elders Stock. The shares of Elders Stock shall be non-voting stock without par value, shall be deemed fully paid and non-assessable upon issuance, and the Corporation expressly waives any requirement of consideration for the shares. Elders Stock shall be issued pursuant to such standards and procedures as may be adopted by the Board of Directors to any Native (as that term is defined in the Settlement Act) who has attained the age of 65 or more and who holds Settlement Common Stock that was not acquired through gift, inheritance or purchase or who transferred such Settlement Common Stock by inter vivos gift. The Corporation shall be authorized to issue one hundred shares of Elders Stock to each Native who meets the qualifications set forth herein. Elders Stock shall not be issued to any person before January 1 of the year following the year in which the person reaches the age of sixty-five.

D. Shares of Elders Stock issued by the Corporation shall

1. be redeemable, in whole or in part, at the option of the Corporation. The Board of Directors is hereby authorized and required to fix, in the manner and to the full extend provided and permitted by law, the redemption price or prices, if any, for the shares of Elders Stock, and

2. not pay dividends or distributions. The holders of Settlement Common Stock shall be entitled to receive such dividends as may be declared by the Corporation, and

3. not be sold, pledged, or assigned in present or future, nor shall inchoate rights thereto, and present or future rights to receive dividends therefrom be sold, pledged or assigned.

In addition, the Board provided the following proxy statement soliciting shareholder votes for the approval of the amendment:

III. Amendment to the Articles of Incorporation to provide Elders Stock

The Elders Stock amendment would allow a one time issuance of 100 shares to original Goldbelt shareholders who reach the age of 65 years or have already reached that age. The Elders Stock would be issued whether or not the person presently owns any shares; if someone was issued original shares and is over 65 on or after the date of adoption of the amendment, that person will be entitled to Elders Stock after January 1 of the year after he or she turns 65.

Elders Stock would not be issued to Natives who were never issued original Goldbelt Settlement Common Stock, and would not be issued to the estates or heirs of original shareholders who never reached the age of 65. If a shareholder inherited or was gifted stock from a parent or relative, for example, and was not issued original Goldbelt stock, he or she will not be eligible to receive Elders Stock.

It is anticipated that Elders Stock would be issued and then immediately redeemed by the corporation, so that no new stock certificates will be issued. Instead, a check for the redemption amount would be sent to all of those eligible to receive the Elders Stock. Elders Stock would be nonvoting preferred stock. It would not be transferable and would not pay future dividends because of its prompt redemption.

If a majority of outstanding shares vote to adopt this amendment to the Articles, then the corporation will be permitted to issue Elders Stock in the format described above. The financial effect of the issuance of this stock would be to reduce the value of stock now held by Goldbelt shareholders. This reduction is known as dilution, and would affect shareholders in two ways:

Dividend dilution–Since there will be more stock eligible to receive distributions, the existing shareholders may receive smaller dividend and distribution checks.

Market value dilution–At present, Goldbelt stock cannot be sold. But, if in the future Goldbelt stock can be sold or if the corporation merges or is dissolved, the value received by Goldbelt shareholders for their shares will be lower if new stock is created.

Goldbelt estimates that approximately 250,000 shares of new Elders Stock will be issued and redeemed over a 40 year period. In the next year, 27,000 shares will be issued, with similar amounts issued in the years to follow, gradually decreasing until the program ends about 40 years later. If the shareholders approve the amendment, the most significant effect will come in the first year after the issuance of Elders Stock. The issuance of the stock, followed by its redemption, will result in a reduction of funds available for investment, for dividends, or for other corporate activities. The extent of the impact depends on the amount authorized for redemption of the shares, which cannot be predicted with any accuracy. As with dividend payments, the decision of the redemption amount will be based upon available funds, the number of recipients, and the corporation’s financial needs at the time.

The Board of Directors recommends adoption of the amendment to provide for Elders Stock.

At the 1997 annual meeting, the shareholders voted to approve the amendment by a vote of 144,485 for and 71,862 against. A board resolution then approved the issuance of 100 shares to each eligible elder and authorized prompt redemption of those shares at $10 per share.

Pat Sierra, a Goldbelt shareholder who alleged she has not received all of the distributions made by the corporation, became the plaintiff in a direct action filed against the corporation after the 1997 election. Sierra’s suit, filed for herself and on behalf of similarly situated shareholders, contested Goldbelt’s creation of the elders’ stock program.[6] Goldbelt moved for summary judgment, arguing that Sierra had failed to state a cause of action in any of her several claims. Over Sierra’s opposition, Superior Court Judge Walter L. Carpeneti granted the motion, and issued final judgment in favor of Goldbelt.

Sierra appeals.

III. Discussion

A. Standard of Review

We apply our independent judgment in reviewing summary judgment decisions, which are made as a matter of law based on undisputed facts.[7] In addition, we apply our independent judgment to questions of statutory interpretation.[8] In applying our independent judgment, we adopt the rule of law that is most persuasive in light of precedent, reason, and policy.[9]

B. Issuance of Shares Without Consideration to Original Elder Shareholders

Sierra argues that Goldbelt cannot limit the elder benefit to original shareholders or provide the elder benefit to elders who are no longer shareholders of Goldbelt. She contends that Goldbelt’s elder benefit is both under-inclusive– because it excludes present shareholders who were not original shareholders–and over- inclusive–because it includes original shareholders who have conveyed away their stock. Sierra argues that restricting eligibility to original shareholders violates AS 10.06.408(a) and corporate law generally. She concludes that the elder benefit diverts the wealth from Goldbelt’s present owners in violation of principles of corporate law as well as ANCSA. She argues that although ANCSA preempts Alaska corporate law, and expressly allows discrimination in favor of elder shareholders, it does not allow discrimination in favor of original shareholders. She argues that to preempt state prohibitions against discrimination in favor of original shareholders, ANCSA must expressly trump state law.[10] Finally, she argues that as applied to original shareholders who no longer own stock, the Goldbelt elder stock program is contrary to the shareholders’ contract–arising from the corporate charter and bylaws and from statutes and common law governing the corporate enterprise–which provides for ownership of corporate wealth on a pro rata basis. This, she claims, is an unconstitutional impairment of contract in violation of the Fifth Amendment.

We conclude that these arguments are unavailing.[11] As Goldbelt argues, ANCSA permits issuing elder stock without consideration.[12] Nothing in the language or history of the statute indicates that Congress intended to limit the power of Native corporations to issue such stock selectively only to elders who continue to own original shares of settlement common stock. To the contrary, Congress has expressed its intention that the ANCSA amendments be interpreted to effectuate their purpose in empowering Native corporations to identify and meet the specific needs of particular groups of Natives.[13] To effectively meet the needs of particular groups of Natives as Congress intended, Native corporations must have broad discretion to fashion elder benefit programs that meet the needs of elders. The amendment somewhat limits this discretion by prohibiting benefit programs that would aid “classes of beneficiaries” defined by reference to “place of residence, family, or position as an officer, director, or employee of a Native Corporation.”[14] The class of beneficiaries relevant in this case, defined as elders who owned original shares of stock, does not fall within this statutory restriction. Moreover, in other parts of the ANCSA amendments, Congress has expressly permitted Native corporations to prefer the beneficiary class of original shareholders–further rebutting Sierra’s suggestion that Goldbelt’s preference for original shareholding elders was not authorized under the statute.[15]

As to including elders who are no longer shareholders in the beneficiary class, we conclude that this too was properly within Goldbelt’s statutory discretion. One purpose of the ANCSA amendments was to permit stock to be issued to a new generation of Natives or Native elders.[16] Because ANCSA contemplated issuing shares to Natives who had not been among the original shareholders, ANCSA necessarily conflicts with traditional corporate law requiring that only current shareholders benefit.[17] Goldbelt correctly argues that “[i]ssuance of such stock would be an impermissible gift, were it not for the overriding provisions of ANCSA.” Alaska Statute 10.06.353 provides that shares may not be issued until they are fully paid for, but 43 U.S.C. § 1606(g)(2)(C)(ii) preempts that provision. Alaska’s corporation code expressly provides for preemption by ANCSA.[18]

In short, ANCSA authorized issuance of elder stock on these terms even though they would otherwise conflict with Alaska’s corporation code. We conclude that, if Goldbelt’s shareholders authorized issuance of the elder stock, Goldbelt’s elder stock program was permitted under ANCSA and is therefore permitted under Alaska law.

C. Adequacy of Proxy Solicitation

Sierra next argues that Goldbelt failed to disclose material facts and misled shareholders with false statements, and that the 1997 election approving the elder benefit was therefore invalid. She also asserts that Goldbelt violated 43 U.S.C. § 1629b(b)(2)(A) because the proxy statement did not set forth the text of the proposed amendment or the board’s resolution.[19] Because the court is evenly divided on both issues regarding the adequacy of the proxy solicitation, the court affirms, without substantive discussion, the summary judgment entered by the superior court.[20]

Two members of the court, Chief Justice Fabe and the author of this opinion, conclude that the proxy statement’s failure to disclose the projected expense of the elder benefit proposal was not fatal. They reason that it is not necessary to include speculative or unreliable–and therefore potentially misleading– information in the proxy statement.[21] They would hold that the circumstances here made it impossible to predict whether the new board that would be elected in 1997 would choose to implement the elder stock program to the extent the prior board proposed, especially given the new board’s access to updated financial data.

The other two members of the court, Justices Matthews and Bryner, have a different view as to this issue. They believe that proxy solicitations may not omit material facts, that is, facts which would likely be considered important by a reasonable shareholder in deciding how to vote.[22] The board in the resolution authorizing the amendment to the articles stated that it “anticipates that the redemption price will be $10 per share so that each elder to whom 100 shares are issued would be entitled to a payment of $1000.” Justices Matthews and Bryner would not reach the issue of the adequacy of the proxy solicitation independent of the requirements of § 1629b(b)(2)(A) because compliance with that subsection would necessarily make the proxy adequate under the Brown v. Ward standard. If they were to consider the adequacy of the proxy solicitation independently of § 1629b(b)(2)(A) , they would hold that whether the board’s resolution statement quoted above likely would be considered important by a reasonable shareholder in his or her choice of whether to vote yes or no on the proxy card was at least a question of fact inappropriate for resolution by summary judgment.

Likewise, as to the second issue, Chief Justice Fabe and the author of this opinion would also affirm. They would hold that the proxy statement satisfied § 1629b(b)(2)(A). In their view, that subsection did not require the proxy statement to include a financial projection that would have been potentially inaccurate. Similarly, they conclude that the proxy statement adequately set forth the amendment or resolution.[23]

Justices Matthews and Bryner disagree. They would hold that the proxy statement did not satisfy § 1629b(b)(2)(A) because it did not “set forth” the board’s resolution. They note that a mere summary of the changes to be effected is insufficient to satisfy the requirements of this subsection. The subsection states that a summary may be sent in addition to the resolution, not as a substitute for the resolution. Congress has used the word “and,” not “or,” in reference to the summary.

All four members of the court are unpersuaded by Goldbelt’s argument that the proxy statement did not have to satisfy § 1629b(b)(2)(A). Goldbelt asserts that ANCSA‘s requirement that shareholders be sent a written proxy “setting forth the amendment or resolution approved pursuant to paragraph (1)” of § 1629b(b) applies only to amendments authorized by both subsections (g) and (h) of § 1606, but not to those amendments authorized under § 1606(g) alone. Goldbelt’s reading of the statute is grammatically permissible. But it is contextually implausible for two main reasons. Goldbelt has not identified any logical reason why Congress might have intended to free this type of amendment from the solicitation requirements of § 1629b(b)(2)(A). And the legislative history found in the House Report on the proxy provision suggests that Congress intended that the solicitation requirements apply to amendments allowing corporations to issue elder shares under § 1606(g).[24]

IV. CONCLUSION

We unanimously agree that Goldbelt’s elder stock program was authorized by ANCSA, and was not precluded by Alaska corporate law, so long as Goldbelt’s shareholders in 1997 properly approved the program. The court is equally divided as to the remaining issues, whether the proxy solicitation was adequate or violated federal law. The court therefore AFFIRMS the judgment entered by the superior court for Goldbelt.

Hanson vs. Kake Tribal Corporation

This is a class action in which shareholders claim that a corporation paid discriminatory dividends. The shareholders prevailed in the superior court. They appeal, claiming that the damage award was too low, that the class was too narrowly defined, and that the court’s award of attorney’s fees under Civil Rule 82 was too low. The corporation cross-appeals, asserting numerous defenses relating both to liability and damages. We affirm the superior court’s liability ruling, vacate the damage award, and remand for recalculation of damages and for consideration of whether an immediate lump sum payment of the judgment is appropriate.

I. FACTS AND PROCEEDINGS

Kake Tribal Corporation (Kake) is a village corporation organized under the Alaska Native Claims Settlement Act (ANCSA). Kake adopted a “Financial Security Plan” which was intended to confer financial benefits on some of Kake’s shareholders. The plan was open only to original Kake shareholders who retained the one hundred shares they were issued when the corporation was organized.

The plan consisted of two programs. Original shareholders of Kake who retained all one hundred of their original shares and were between twenty-one and sixty-nine years of age were entitled to participate in the basic program. Individuals who were seventy years of age or older, and met the same shareholding requirements, were entitled to enroll in the senior program.

Under the basic program, Kake purchased a life insurance policy for each program participant. Kake retained control of the policies, was named as the beneficiary, and retained the cash surrender values. Upon the death of a participant, the life insurance proceeds were placed in an account with an investment management firm. The funds in this account were used to pay program benefits, and for other corporate purposes.

Participants who enrolled in the basic program had the option of choosing either a living benefits program or a death benefits program. The death benefits program provided for an immediate payment upon the death of the participant of $1,800 in funeral expenses and monthly payments of $225 for sixteen years to beneficiaries designated by the participant. If a participant chose the living benefits option, the participant could elect to receive $100 per month for fifteen years beginning at age sixty- five, plus a $1,000 payment to the participant’s beneficiaries at the time of the participant’s death. Alternatively, the living benefits participant could elect to receive $4,000 per year, starting at age sixty-eight, for three years, plus a $1,000 payment to the participant’s beneficiaries at death.

The senior program promised to pay each participant $100 per month for up to 180 months, plus $1,000 in funeral expenses at death. This program was devised because the shareholders who were seventy years of age or older were generally uninsurable.

Kake began to experience financial difficulty. After making twenty-three monthly payments to the elders — as the parties describe the participants in the senior program — the payments were suspended in 1982 due to lack of funds. On January 12, 1989, Kake paid each surviving elder $100 per month retroactive to October 1982 and each elder’s estate $100 for each month from October of 1982 until the time of the elder’s death. The corporation then discontinued the senior program.

Meanwhile, in 1985, Kake switched the insurers which were underwriting the basic program. This required that new insurance forms be filled out by program participants. Many shareholders failed to re-enroll with the new insurer.

The basic program was modified in 1989. Kake’s liability to pay death benefits from the account with the investment management firm was limited, and the living benefits program was terminated. On March 1, 1992, the basic program was terminated.

The plaintiffs filed suit on August 31, 1990, alleging that the plan unfairly discriminated against them. Arlene Hanson and Victor Davis, Jr., are the widow and minor son of an original shareholder of Kake. When he died, fifty of his shares were transferred to Arlene and fifty passed to Victor. These shares were no longer considered to be original shares and, as a result, Arlene and Victor were not entitled to participate in the plan. Clifford Tagaban inherited twenty-five shares from his grandmother. He was also ineligible to participate in the plan.

In 1992 the plaintiffs amended their complaint, asserting class action claims. Kake moved for summary judgment on statute of limitations grounds. Superior Court Judge Thomas M. Jahnke ruled that each payment to favored shareholders gave rise to a separate cause of action, subject to a separate limitations analysis; that the six-year statute expressed in AS 09.10.050 governed this case; that the statute barred claims accruing more than six years before the case was filed, that is claims accruing before August 31, 1984; and that claims held by minors were tolled pursuant to the tolling provisions of AS 09.10.140.

In the spring of 1993, the parties filed cross-motions for summary judgment on remaining liability issues. At roughly the same time, by stipulation, the plaintiffs filed a second amended complaint which they claim expanded the class to include all shareholders who had been discriminated against, whether or not they participated in the plan.

The case was set for trial on June 28, 1993. Just before trial, the trial judge, Walter L. Carpeneti, ruled in the plaintiffs’ favor on the summary judgment motions, holding “as a matter of law payments both to beneficiaries of shareholders and to shareholders directly under the challenged plan are distributions under state law, that the payments violate the rule of uniformity and that the defendant is therefore liable to plaintiffs.”

On June 25, 1993, plaintiffs filed a motion to amend the class certification order to include all shares against which the plan had discriminated, not just those whose owners had been termed ineligible to participate in the plan. On the third day of trial Judge Carpeneti ruled on this motion, indicating that he would grant it, but only on the condition that the summary judgment order on liability be vacated, and that plaintiffs pay defendant’s attorney fees for lost trial and trial preparation time.

The plaintiffs declined to accept these conditions and trial proceeded on the issue of damages. Following trial, the plaintiffs moved for reconsideration of the class certification order. The court again indicated that it would expand the class, but only on the condition that its order granting partial summary judgment on liability be set aside. A new trial would then be necessary. The class declined this condition and withdrew the motion for reconsideration.

Following the trial, the court found that any shareholders who had participated in the plan, no matter how briefly, were excluded from any remedy. The court ruled that the remedy of shareholders holding less than one hundred shares would be calculated on a per share basis, while the remedy of shareholders who held more than one hundred shares would be limited to one hundred shares. It found the plan to have cost Kake $1,996,000 or $47.30 for each participating share. The court awarded damages of $47.30 per share to the 11,152 shares which qualified for the remedy. Judgment for the class in the principal amount of $527,489.60 was entered. Subsequently, Judge Jahnke awarded pre- judgment interest of $438,178.38 and attorneys’ fees of $125,000.

Plaintiffs and Kake have appealed. Their claims on appeal will be identified in the discussion that follows.

II. DISCUSSION

A. Payments under the Plan Were Illegal

Kake claims that payments under the plan were not dividends. Instead, it argues that the plan was a social welfare program which is permissible under ANCSA. Kake, however, points to no provision which may be read as authorizing the plan.

It is true that a corporation may engage in charitable giving. AS 10.06.010(13) (a corporation has the power to “donate for the public welfare or charitable, scientific or educational purposes . . . “). The plan, however, was merely a method of distributing corporate assets to certain shareholders. No reasonable argument can be made that the plan was instead a series of charitable gifts. Indeed, the stated purpose of the plan was to provide financial security to the original shareholders of Kake. Distributions were to be made regardless of the need or financial status of the distributes.

Kake also argues that the senior program was authorized under amendments to ANCSA passed in 1988. These amendments did authorize the issuance, without consideration, of a special class of stock for shareholders who had attained the age of sixty-five. 43 U.S.C.A. section 1606(g)(2) (West Supp. 1996). However, creation of such stock requires a shareholder vote or an amendment to the articles of incorporation. 43 U.S.C.A. section 1629(b) (West Supp. 1996). Kake never took these steps. Thus the senior program cannot be considered a valid exercise of the power granted by the 1988 ANCSA amendments.

Because no provision of ANCSA authorizes the plan, the payments in this case were illegal. Subject to certain limited exceptions not relevant for present purposes, holders of village corporation stock have “all rights of a stockholder in a business corporation organized under the laws of the State.” The quoted language is drawn from section 6(h) of ANCSA (43 U.S.C.A. section 1606(h)(l) (West Supp. 1996)), which pertains to the stock of regional corporations. Section 7 [sic] of ANCSA (43 U.S.C.A. section 1607) makes section 6(h) applicable to village corporations. One of the rights of a shareholder of a business corporation is the right to enjoy equal rights, preferences, and privileges on his or her shares. Alaska Statute 10.06.305 provides that “[a]ll shares of a class shall have the same voting, conversion, and redemption rights and other rights, preferences, privileges, and restrictions.” The statute thus commands that every share shall have the right to “the same rights, preferences, and privileges” of whatever sort. Whether or not the payments at issue were “dividends” as the plaintiffs maintain, they unquestionably may be characterized as “preferences” or “privileges” based on stock ownership. It is evident, therefore, that the payments violated the rights of the excluded shareholders.

B. Statute of Limitations Issues

1. The Six-Year Statute Governs this Case

Kake claims that this suit is an action “upon a liability created by statute” and is therefore governed by the two-year statute of limitations expressed in AS 09.10.070. Plaintiffs argue that the six-year statute set forth in AS 09.10.050 controls because this action is contractual in nature and is one that was recognized at common law.

We agree with the plaintiffs. The relationship between a corporation and its shareholders is primarily contractual. See Trustees of Dartmouth College v. Woodward, 17 U.S. (4 Wheat) 518, 656, 4 L. Ed. 629, 664 (1819); State ex rel. Swanson v. Perham, 191 P.2d 689, 693 (Wash. 1948). This court has previously held that actions against corporate directors for breach of fiduciary duty sound in contract and are governed by the six-year statute. Bibo v. Jeffrey’s Restaurant, 770 P.2d 290, 295-96 (Alaska 1989). It is our view that the holding in Bibo applies by analogy to this case.

2. A Separate Cause of Action Accrued with Each Payment

Kake argues that the cause of action accrued on the effective date of the plan not, as Judge Jahnke ruled, that a separate cause of action accrued with each discriminatory payment. Citing Howarth v. First National Bank of Anchorage, 540 P.2d 486, 490-91 (Alaska 1975), Kake argues that it is not necessary for an injury to occur in order for a cause of action in contract to accrue. It contends that a cause of action accrues at the time when the plaintiffs could have first maintained the action to a successful conclusion. Plaintiffs, on the other hand, contend that each discriminatory distribution gave rise to a new cause of action because each payment was a new wrong. They rely on, among other cases, Bibo, 770 P.2d at 294.

One of the claims in Bibo was that controlling shareholders of a corporation made excessive compensation payments to a bookkeeping service in which the controlling shareholders had a majority interest. Id. at 292. Bibo, the minority shareholder, claimed that these excessive payments were, in essence, discriminatory dividends. Id. We held that a separate cause of action accrued with each payment to the bookkeeping service. “Each excessive payment is a separate wrongful act.” Id. at 294.

It is our view that the Bibo precedent is applicable here. Acceptance of the rule advocated by Kake would permit a corporation to escape liability for a plan to pay illegal distributions by announcing the program and then awaiting the expiration of the period of limitations before actually paying the distributions. We see nothing to commend such a result.[1]

3. Payments Made before August 31, 1984 Are Time Barred

In calculating damages, Judge Carpeneti did not distinguish between payments made more than six years before this suit was filed and payments made within the six-year period. Given our acceptance of Judge Jahnke’s ruling that each discriminatory payment was a separate wrongful act, it follows that no compensation may be awarded for payments which were made more than six years before the suit was filed. While continuing payments prevent the running of the statute of limitations, there can be no redress for the time-barred payments. See Oaksmith v. Brusich, 774 P.2d 191, 200 n.10 (Alaska 1989).

4. The Minor Tolling Statute Was Applied Properly

The trial court ruled that the statute of limitations for the claims of minor stockholders was tolled by AS 09.10.140. This statute provides in relevant part:

(a) If a person entitled to bring an action . . . is at the time the cause of action accrues . . . under the age of majority . . . the time of . . . disability . . . is not a part of the time limit for the commencement of the action. . . . [T]he period within which the action may be brought is not extended in any case longer than two years after the disability ceases.

Stock of ANCSA village corporations “that a minor is entitled to receive . . . shall be held by a custodian.” AS 13.46.085(a). The custodianship is governed by the provisions of the Alaska Uniform Transfers to Minors Act, AS 13.46. See AS 13.46.085(d). Judge Jahnke ruled that the minor tolling statute applies, even though shares of stocks are controlled by a custodian because legal title to the shares is held by the minor rather than the custodian.

Kake takes no issue with Judge Jahnke’s conclusion that legal title to ANCSA stock held for a minor is in the minor rather than in the custodian. Kake argues, however, that since a custodian has the power to sue and a minor does not, AS 09.10.140 does not apply. Kake argues:

[Alaska Statute] 09.10.140 tolls the statute of limitations “if a person who is entitled to bring an action . . . is, at the time the cause of action accrues . . . under the age of majority.” In this case the person who is entitled to bring the action at the time it arose is the custodian, who is not under the age of majority. Consequently, AS 09.10.140 does not, by its terms, toll the statute of limitations for stock held by custodians.

Kake also argues that the policy reasons underlying statutes of limitations, the encouragement of prompt prosecution of claims and avoiding injustices which may result as a consequence of delay, favor not applying the tolling statute where there is a competent custodian.

Kake’s argument focusing on the text of AS 09.10.140(a) lacks merit in our view. The “person” referred to in subsection (a) is the minor or other person under disability. The concept of entitlement to bring an action is most sensibly construed to mean entitlement, but for the person’s disability. So understood, the act applies to minors, even those with guardians. While it is true that a custodian may sue on behalf of a minor, who is in turn not legally able to sue, a similar state of affairs exists for injured minor children. Their parents may sue for them, and they are legally disabled from suing on their own behalf.[2] Yet, in such cases, the tolling rule plainly applies. E.g., Fields v. Fairbanks North Star Borough, 818 P.2d 658 (Alaska 1991).

There is weight to Kake’s policy argument. However, there are countervailing policy considerations. Custodians are ordinarily not professional representatives and they may not be alert to the need to take action on a minor’s behalf. It can be regarded as fundamentally unfair to a minor to saddle the minor with the consequences of a custodian’s neglect. We stated in Haakanson v. Wakefield Seafoods, Inc., 600 P.2d 1087, 1090-91 (Alaska 1979):

The legislature has found [by enacting AS 09.10.140] . . . . that certain circumstances outweigh the policies underlying these statutes of limitation . . . . This statute expresses the public policy that favors safeguarding the interests of minors. We can think of no good reason why this expression of legislative policy should not apply to wrongful death actions.

As in Haakanson, we can think of no persuasive reason why the minor tolling rule should not apply to cases involving a minor’s property which is controlled by a custodian.[3]

C. The Superior Court Was Correct to Permit the Plaintiffs to Proceed with a Direct Action

1. Permitting a Direct Action in this Case Is the Only Way to Provide an Adequate Remedy for the Shareholders Who Were Excluded from the Financial Security Plan

If a direct action were not permitted in this case, the possible defendants in a derivative action would be (1) the shareholders who received payments under the financial security plan, and (2) the corporation’s officers and directors. For the following reasons, it is unlikely that a derivative suit against either or both of these groups would be an adequate remedy for the plaintiffs.

First, the corporation may not be entitled to any damages from the shareholders who received payments under the financial security plan. Under AS 10.06.378, liability is imposed on shareholders who receive unlawful dividends only when they have accepted payments knowing that the distribution was in violation of certain legal limits. It is unlikely that the beneficiaries of the financial security plan knew that the payments violated the law. This suggests that the beneficiaries of the financial security plan would not be liable to the corporation.

Second, it is unlikely that any damages collected from the responsible directors and officers would approximate the sum of payments made under the plan.[4]

2. Courts Have Wide Discretion to Determine Whether a Complaint States a Derivative or a Primary Claim

Courts generally “have wide discretion in interpreting whether a complaint states a derivative or primary claim.” Charles R.P. Keating & Jim Perkowitz-Solheim, 12B Fletcher Cyclopedia of the Law of Private Corporations § 5911 (perm. ed. rev. vol. 1993) (hereinafter Fletcher). Indeed, as the United States Supreme Court has recognized, the same allegations of fact in a complaint may support either a derivative or an individual cause of action. See J.I. Case Co. v. Borak, 377 U.S. 426 (1964) (stating with regard to claim that proxy was false and misleading, “we believe that a right of action exists as to both derivative and direct causes.”).

It is possible to characterize the allegations in this case as stating a derivative claim. Courts have held that “when a wrong has been done to the corporation, the shareholder’s right to sue the directors or wrongdoers for redress is derivative and not primary.” 13 Fletcher, supra, § 5928. And, in a metaphysical sense, the illegal payments in this case can be said to have “harmed the corporation.”

There is also ample support for the proposition that these allegations state a direct claim against the corporation. Two points supporting this contention warrant emphasis. First:

A plaintiff alleges a special injury and may maintain an individual action if the shareholder complains of an injury distinct from that suffered by other shareholders, or a wrong involving one of the shareholder’s contractual rights as a shareholder. Thus, where there is no question that plaintiffs are claiming an injury that was not suffered by all shareholders, but only by minority shareholders, that action is properly classified as representative rather than derivative.

13 Fletcher, supra, § 5908. In this case, the plaintiffs do not allege that the corporation was harmed. Their claim is that the corporation by paying certain shareholders a discriminatory distribution harmed them. Another way of expressing this point is that the rule “that a shareholder cannot sue for injuries to his corporation . . . [does not apply when] the shareholder suffered an injury separate and distinct from that suffered by other shareholders.” 13 Fletcher, supra, § 5911. In this case, the excluded shareholders clearly “suffered an injury separate and distinct from other shareholders.” The shareholders who received payments under the plan suffered no meaningful injury whatsoever.

Although it seems anomalous to say that a shareholder who has received illegal payments has suffered an injury, it is true that there are cases in which courts have required a derivative suit where fiduciaries of a corporation who were also shareholders received illegal payments.[5] Such courts have reasoned that all the shareholders of the corporation — even the fiduciaries who received illegal payments — were harmed by the diminution in value of their shares and that the “corporation” therefore was injured. A holding permitting the plaintiffs here to proceed through a direct action would not be inconsistent with these cases: In all such decisions of which we are aware, the defendant shareholders were also fiduciaries of the corporation. This difference is significant because, as already suggested, a corporation can recover from fiduciaries who misappropriate corporate assets. It may not be able to recover from rank and file shareholders. Consequently, where the recipients of the misappropriated funds are fiduciaries, a derivative action will adequately compensate the plaintiffs; where the recipients of misappropriated funds are rank and file shareholders, a derivative action will not adequately compensate the plaintiffs.

The second point supporting the contention that a direct action is appropriate here is that there are many reported cases concerning discriminatory distributions which proceeded as direct actions. See, e.g., Amalgamated Sugar Co. v. NL Industries, Inc., 644 F. Supp. 1229 (S.D.N.Y. 1986); Asarco, Inc. v. Holmes A. Court, 611 F. Supp. 468 (D.N.J. 1985); Jones v. H.F. Ahmanson & Co., 460 P.2d 464 (Cal. 1969); Donahue v. Rodd Electrotype Co., 328 N.E.2d 505 (Mass. 1975); Erdman v. Yolles, 233 N.W.2d 667 (Mich. App. 1975); Stoddard v. Shetucket Foundry Co., 34 Conn. 542 (1868). Although such cases usually involve close corporations, our research has not revealed a single case in which (1) a publicly- held corporation made a discriminatory distribution to a group of its rank and file shareholders, (2) the shareholders attempted to proceed through a direct action, and (3) the court held that the plaintiffs had to proceed through a derivative action.

Thus, on the facts at issue here, a court has sufficient discretion to permit this action to proceed as either a direct or a derivative suit. The crucial inquiry, therefore, is how the court should exercise its discretion.[6]

3. Although Its Decision to Permit the Plaintiffs to Proceed with a Direct Action Was Appropriate, the Superior Court Did Not Adequately Address Two Policy Concerns Raised by Its Order

The superior court’s decision (1) permitting the plaintiffs to proceed with a direct action, and (2) ordering Kake to pay damages immediately and in a single payment to the excluded shareholders, raises two policy concerns which the superior court did not adequately address. First, it is possible that an immediate lump sum payment to the excluded shareholders would be inconsistent with AS 10.06.358. That statute places certain limitations on the ability of a corporation to pay dividends. Second, it is conceivable that requiring Kake to pay damages immediately and in a lump sum would disrupt Kake’s operations or prevent Kake from pursuing a profitable business opportunity. The result would be that all Kake shareholders would be injured.

 Although these concerns should be addressed by the superior court on remand, neither of the concerns warrants a conclusion that the superior court erred in permitting a direct action. As discussed above, where discriminatory payments are made to a group of rank and file shareholders, barring the excluded shareholders from proceeding through a direct action likely forecloses their only effective remedy. Under these circumstances, relegating the plaintiffs to a derivative suit seems unjustifiable if the two policy concerns can be adequately addressed in the context of a direct action.

They can be. On remand, the superior court should determine whether an immediate lump sum payment of the damages it orders will deplete Kake’s assets below the level which would be permissible under AS 10.06.358. If a lump sum payment would have such an effect, the superior court should fashion a payment schedule which ensures that Kake’s assets will not be depleted below the level permissible under AS 10.06.358. The superior court should also give Kake the opportunity to make a showing that its operations or investment opportunities would be impaired if it were compelled to pay immediately the entire amount of the judgment. If Kake can make such a showing, the superior court should fashion an appropriate payment schedule.

Finally, if the superior court concludes that an immediate lump sum payment of damages would be inappropriate for either of the reasons discussed above, the court should consider ordering Kake to suspend the payment of dividends to shareholders until Kake fully compensates the shareholders in the plaintiff class.

D. Measure of Damages

The trial court ruled that damages were to be determined by dividing the cost of the plan by the number of shares that were included in the plan, to arrive at the cost of the plan per share, then multiplying that cost by the number of shares held by the plaintiffs who were excluded from the plan. The court found that 42,200 shares participated in the plan, and the plan cost the corporation a total of $1,996,000. This resulted in a cost per share of $47.30. The trial court awarded each member of the plaintiff class $47.30 times the number of shares each held.

  This approach is inconsistent with the nature of this case. If this were a derivative action, the remedy would be based upon the harm done to the corporation. However, this is a direct action to recover damages for a discriminatory distribution and the measure of damages suffered by plaintiffs should be a payment that gives them parity with those who received payments under the plan. See Nichols v. Olympia Veneer Co., 246 P. 941 (Wash. 1926).

Plaintiffs suggest, perhaps rhetorically, that a damage award could be made that would give plaintiffs parity with the highest distribution that any share received. This would amount to $542.16 per share. Plaintiffs arrive at the $542 figure by dividing the premiums that Kake paid for the shareholders with the most expensive policies, by the one hundred shares owned by those shareholders. This suggestion is faulty for two reasons. First, no shareholder actually received $542 per share. Second, the appropriate measure of damages is not the cost to the corporation, but the benefit to the shareholders. Although the premiums for the life insurance policies for several of the shareholders were in excess of $500 per share, these shareholders did not actually receive the policies, nor were their beneficiaries slated to receive the benefits defined in the policies. The policies were the method chosen by Kake to fund the payments promised under the plan. Kake retained control of the policies, retained the cash surrender value, and was the named beneficiary. Benefits paid upon the death of a shareholder were pooled into a managed account, controlled by Kake, and it was from this account that payments were made to the beneficiaries. No shareholder can actually be said to have received a life insurance policy under the program. The fact that some policies were very expensive while others were relatively cheap is irrelevant to plaintiffs’ remedy.

Plaintiffs argue, apart from the suggestion discussed above, that benefits of $121 per share were paid to a significant number of Kake shareholders and that plaintiffs’ damages should be calculated based on that benefit level. The $121 per share figure is based on the amount paid the elders. They received twenty-three monthly payments of $100 before 1982. They did not receive any payments for the next seven years, but were then given a lump sum of $9,800, or $98 per share.

 We agree that the payments to the elders furnish an appropriate measure for the compensatory distribution due plaintiffs. However, because the twenty-three monthly payments were all made more than six years before plaintiffs filed this suit, recovery for discrimination based on these payments is barred by the statute of limitations, except for shares held by minors. The $9,800 payments were made within the year before the suit was filed. Therefore adult plaintiffs are entitled to $98 per share, and minor plaintiffs are entitled to $121 per share.

E. The Trial Court Did Not Abuse Its Discretion in Denying the Motion to Expand the Class

On March 10, 1993, the trial court certified the class consisting of “all those shareholders of Kake Tribal Corporation (1) who are not presently enrolled in the Kake Financial Security Plan, or (2) who have not been enrolled in the Plan at any time since 15 October 1980, or (3) who own [Kake] stock other than shares designated as ‘100 shares of original Class A Stock.'” In April 1993, the plaintiffs filed a second amended complaint which, they claim, expanded the class. As previously stated, supra p. 5, immediately before trial plaintiffs filed a motion to amend the class certification order to “redefine the Class to include additional [Kake] shareholders who have been excluded from full participation in [Kake’s] corporate distributions.” Judge Carpeneti indicated that he would grant the motion to expand the class, but only on conditions that plaintiffs would not accept. Plaintiffs’ post-trial motion for reconsideration had a similar ultimate result. Plaintiffs argue that the trial court should have unconditionally granted the motion to expand the plaintiff class.

The trial court acted within its discretion in conditioning expansion of the class in the manner that it did. The class proposed by plaintiffs would have broadened the scope of the lawsuit. Plaintiffs’ proposal would have inflated the class from only those shareholders who had never participated in the program to all shareholders except those who had received the maximum amount of benefits under the plan. As a practical matter, this would have included every shareholder who was not enrolled in the senior program.[7]

New defenses on liability applicable to the new class members were a possibility. The damages trial would be more complicated. Delay so that the notice and exclusion procedures mandated by Civil Rule 23(c) could be followed was inevitable. Trial time and trial preparation time would be lost. Under these circumstances the court could have simply denied the motion on untimeliness grounds. Conditioning the grant of the motion on re-opening liability issues and paying costs for wasted time was also an appropriate resolution.[8]

F. Prejudgment Interest Must Be Recalculated

Kake argues that prejudgment interest should not reach back beyond the bar imposed by the six-year statute of limitations. No effective response is made to this argument, and it is manifestly correct. The argument does not, however, apply to shares held by minors whose remedy is not barred by the six-year statute because of the minor tolling provision of AS 09.10.140.

 Kake also argues that AS 09.30.070(b) governs a portion of this case. That section provides in relevant part:

[P]rejudgment interest accrues from the day process is served on the defendant or the day defendant received written notification that an injury has occurred and that a claim may be brought against the defendant for that injury, whichever is earlier.

This provision is applicable to causes of action which accrue after June 11, 1986. It therefore does not apply to payments made before that date.

Kake acknowledges that it received written notice from Mrs. Hanson of her claim and that of her son prior to June 11, 1986, but argues that it did not receive notice of a class claim until the amended complaint was filed on June 15, 1992. Therefore one issue is whether notice of an individual claim under subsection .070(b) will suffice to support the accrual of prejudgment interest on a class claim.

Plaintiffs argue that subsection .070(b) does not apply to contract claims, as it was adopted as part of tort reform legislation and uses the language of tort (“injury”) rather than contract.

The briefing on these questions is inadequate. Ordinarily, in such circumstances the proponent of the issue is deemed to have waived the issue. Adamson v. University of Alaska, 819 P.2d 886, 889 n.3 (Alaska 1991) (“[W]here a point is given only cursory statement in the argument portion of a brief, the point will not be considered on appeal.”). However, in this case we do not believe that the waiver remedy would be appropriate because both parties are proponents of inadequately briefed points going to the award of prejudgment interest. Additionally, prejudgment interest must be entirely recalculated given our decision on the other issues in this case. Under these circumstances, we believe that it is best that the question of the application of AS 09.30.070(b) be reconsidered by the trial court on remand.

G. Attorney’s Fees

 Plaintiffs argue that the trial court’s award of attorney’s fees under Civil Rule 82 was inadequate. As noted, the court awarded attorney’s fees of $125,000 to be paid by Kake to the class.[9] In making the award the court did not follow the schedule set forth in Civil Rule 82(b)(1). It found that a variation was warranted because “Kake Tribal conducted a well- financed, deliberately excessively litigious defense.” On the other hand, the trial court found that plaintiffs’ counsel were inefficient and that the total amount of attorney’s fees reasonably incurred by them had they worked efficiently would have been $210,000. The court awarded more than half of this sum as a partial award of attorney’s fees in consideration of the factors listed in Civil Rule 82(b)(3).

Based on our review of the record we think that the superior court’s conclusion concerning the inefficiency of plaintiffs’ counsel is a reasonable one. Based on that conclusion and given the fact that the court’s award of attorney’s fees was greater than the amount that the class would have been entitled to under the schedule of Civil Rule 82(b)(1), we conclude that the award was not erroneous. On the other hand, on remand, it may be appropriate for the court to reconsider the award in light of the new judgment amount. The court is authorized to do so.

III. CONCLUSION

  The judgment of the trial court concerning liability is affirmed. The award of damages and prejudgment interest is vacated. The award of attorney’s fees is affirmed, but the court may reconsider the award after damages are recalculated. This case is remanded for further proceedings in accordance with this opinion.

 AFFIRMED in part, VACATED in part, and REMANDED.


FABE, Justice, dissenting.

I. INTRODUCTION

I dissent from the opinion of the court because I disagree with its decision to allow plaintiffs to bring a direct rather than a derivative action. The gravamen of the plaintiffs’ complaint is a wrong to the corporation as a whole. Basic principles of corporation law therefore require the plaintiffs to bring a derivative shareholder action to remedy that wrong. The court’s failure to adhere to this well-established rule leads it to adopt a result that rather than remedying the discriminatory plan, continues it. Under the court’s decision, shareholders who are as innocent of wrongdoing as the plaintiffs will be forced to pay for a recovery that bears little relationship to any harm the plaintiffs actually suffered.

II. DISCUSSION

A. As a Native Corporation, Kake Differs Significantly from Non-Native Corporations in Purpose and History.

The facts of this case cannot be properly understood without a brief discussion of the history and aims of the Alaska Native Claims Settlement Act (ANCSA). Although Kake’s “financial security plan” was not permissible under ANCSA, the distributions under the plan did not arise from greed or bad faith. Rather, they resulted from the conflicts inherent in the difficult role ANCSA gave to Native corporations.

In enacting ANCSA, Congress intended to settle Native land claims in a way that both initiated Natives into the “American mainstream,” Monroe E. Price, A Moment in History: The Alaska Native Claims Settlement Act, 8 UCLA-Alaska L. Rev. 89, 95 (1979), and addressed their “real economic and social needs.” 43 U.S.C. section 1601(b) (1994). Under ANCSA, Congress imposed on the myriad Alaska Native communities a “formidable framework” of corporations to distribute settlement land and funds and serve as a vehicle for Native development. Felix S. Cohen’s Handbook of Federal Indian Law 752-53 (Rennard Strickland et al. eds., 1982) (hereinafter Cohen). These corporations, as the Ninth Circuit recently noted, “differ markedly from ordinary business corporations” in their structure and purposes. State v. Native Village of Venetie Tribal Gov’t, 101 F.3d 1286, 1295 (9th Cir. 1996). John Shively, an expert witness for Kake in the instant case, testified that ANCSA’s use of the corporate model should be understood as a “social experiment,” unprecedented in Congress’s dealings with Native Americans elsewhere. See Cohen, supra, at 740.

 In 1987, Congress amended ANCSA to reconcile the corporate form and the needs of Native communities. Alaska Native Claims Settlement Act Amendments of 1987, S. Representation. No. 100-201, 100th Cong., 1st Sess. 19-21 (1987), reprinted in 1987 U.S.C.C.A.N. 3269-72 (hereinafter S. Representation. 100-201). Under these amendments, Native corporations are allowed to convey assets to a “settlement trust” to “promote the health, education, and welfare of its beneficiaries and preserve the heritage and culture of Natives.” 43 U.S.C. section 1629e(b)(1) (1994).[1] The amendments also allow regional corporations to issue different classes of stock so as to benefit “Natives who have attained the age of sixty-five” and “other identifiable groups of Natives.” 43 U.S.C. section 1606(g)(2)(B)(iii)(I) and (II) (1994). The result, as John Shively testified, has been to “recognize the nativeness of the settlement, not the corporateness of the settlement” and to “provide for what the [N]atives felt met their . . . real economic and social needs.” See S. Representation. 100-201, supra p. 29, at 20-21.

 It is against this backdrop that Kake’s financial security plan must be understood. The plan began as a means to assist shareholders in the village corporation who had seen little direct compensation from the ANCSA settlement.[2] Rather than “merely a method of distributing corporate assets to certain shareholders,” Op. at 1324, the plan was an attempt to overcome the “‘limitations of the corporate form of organization as the means of delivering benefits.'” Martha Hirschfield, Note, The Alaska Native Claims Settlement Act: Tribal Sovereignty and the Corporate Form, 101 Yale L.J. 1331, 1338 (quoting U.S. Dep’t of the Interior, ANCSA 1985 Study, at ES-14 (June 29, 1984) (unpublished draft)).

Kake chose the structure of the plan at the suggestion of Mutual Life Insurance Company of New York (MONY), which then sold Kake the insurance to fund it. MONY assured Kake’s president that the plan would “fit into the provision [sic] of the Alaska Native Claim [sic] Act” and “protect both Kake Tribal Corporation and Mutual of New York from not only dissatisfied [sic] shareholder [sic], but eager attornies [sic] and the Internal Revenue Service as well.”

 The board of directors adopted the plan and publicized it “for the welfare of our people who were retired or for the welfare of those whom they left behind when they died.” Clarence Jackson, the president of Kake and a member of the board of directors when the plan was adopted, stated that the board “feared that ANCSA meant that various welfare programs of the United States for Alaska Natives might be phased out leaving it to the corporations to provide for the security of these people.” Along with the benefits described by the court, Op. at 1322-1323, the corporation also paid the funeral expenses for all deceased shareholders, whether or not they were plan members. The plan, while untenable for a traditional business corporation, was in line with ANCSA’s purposes and similar to the programs approved by Congress in the 1988 amendments to ANCSA and recently upheld by the Ninth Circuit. See 43 U.S.C. section 1606(g)(2)(B)(iii)(I); Broad v. Sealaska Corporation., 85 F.3d 422 (9th Cir. 1996).

However, while the context of this case is unusual, I agree with the court that the financial security plan was not permitted under ANCSA or Alaska law. Kake never undertook any of the procedural steps to establish a settlement trust under 43 U.S.C. section 1629e (1994). Therefore, Kake’s financial security plan cannot be approved under the 1988 amendments to ANCSA. The question remains, however, what legal consequences should flow from that conclusion.

B. The Superior Court Should Have Required Plaintiffs to Frame Their Complaint as a Derivative Shareholders’ Action, Not a Direct Action.

Under basic principles of corporation law, when the board of directors and executives of a corporation make an impermissible payment of corporate funds, the shareholders’ right to redress is derivative and not direct. Charles R. P. Keating & Jim Perkowitz-Solheim, 12B Fletcher Cyclopedia of the Law of Private Corporations §§ 5928, 5929.20 (perm. ed. rev. vol. 1993) (hereinafter Fletcher). This is the rule even if the illegal payments are made to other shareholders. See, e.g., Mann-Paller Found. v. Econometric Research, 644 F. Supp. 92, 93-94, 98 (D.D.C. 1986). The reasoning behind this rule is that such impermissible payments, by reducing the corporation’s assets and thus the value of each share of stock, harm all shareholders equally. Id. at 98; see also 12B Fletcher, supra p. 5, § 5913. Thus, for the shareholders to be made “whole,” the misspent assets must be recovered by the corporation so that they can be used for proper corporate purposes. Hikita v. Nichiro Gyogyo Kaisha, Ltd., 713 P.2d 1197, 1199 (Alaska 1986).

The court acknowledges the merit of this analysis, Op. at 1327, but avoids its application. Instead, relying on its conviction that the harm to the plaintiffs consisted in Kake’s failure to make payments to them under the plan, the court concludes that Kake must pay the plaintiffs the same amount as it paid the elders. Op. at 1328, 1330. This reasoning can be summarized as follows: (1) the plaintiffs’ only possibility for a recovery is through a direct action; (2) the trial court has broad discretion in allowing direct actions; (3) a direct action is justifiable in this case because the plaintiffs complain of a “special injury;” and (4) the trial court can modify the remedy to alleviate the problems created by permitting a direct action. I address each step of this argument in order.

The court’s opinion states that “a direct action . . . is the only way to provide an adequate remedy” to the plaintiffs. Op. at 1326-1327. It reasons first that “the corporation may not be entitled to any damages from the shareholders who received payments under the financial security plan.” Op. at 1327. I agree. The court also states, however, that “it is unlikely that any damages collected from the responsible directors and officers will approximate the sum of payments made under the plan.” Op. at 1327. There is no support for this assumption in the record before us. Furthermore, even if this assertion were supported by the record, I fail to see its legal relevance. The proper focus in determining whether a shareholder may bring a direct or a derivative action is not the likelihood of complete recovery, but the nature of the harm. 12B Fletcher, supra p. 5, § 5908.

The court further argues that “even if the corporation actually did recover damages equivalent to the total payments under the financial security plan, any part of the damages paid by the directors and officers would be a windfall for the shareholders who received distributions under the plan.” Op. at 1327 n.4. However, such a “windfall” would not harm the plaintiffs. The plaintiffs would receive no more and no less than what they were entitled to: the full value of their shares in the corporation. Any extra payment to shareholders who received distributions under the plan would be funded entirely by those found liable for the impermissible distributions, not by the plaintiffs or the corporation. Furthermore, the payments would not reward wrongdoing, since, as the court notes, the shareholders who were included in the plan most likely did not know “the payments violated the law.” Op. at 1327.

As the next step in its analysis, the court states that the superior court has “wide discretion in interpreting whether a complaint states a derivative or primary claim.” Op. at 1327. The full statement of the rule is as follows:

[C]ourts generally have wide discretion in interpreting whether a complaint states a derivative or primary claim. The caption and prayer may aid in determining which is the true character of the action, although the complaint does not make an action individual or derivative by calling it one or the other, and the prayer for relief may be disregarded in determining whether the action is an individual or a derivative one. The nature of the action is to be determined from the body of the complaint rather than from its title.

12B Fletcher, supra p. 32, § 5912. This passage means that the trial court is free to disregard the parties’ characterization of the cause of action, not that the law affords the trial court latitude in making its determination. This principle, in my view, is central to a correct understanding of this case. The superior court erred in this case because it failed to look beyond the plaintiffs’ characterization of their claim.

There are cases, as the court’s opinion points out, in which a shareholder may bring both a derivative and a direct action. See, e.g., Hikita, 713 P.2d at 1199. However, in such cases the shareholder must have an independent basis for the direct action, usually the corporation’s violation of a duty “arising from contract or otherwise, and owed to the shareholder directly.” 12B Fletcher, supra p. 32, § 5921. Such an independent basis is not present in this case.[3]

In the third step of its analysis, the court contends that the plaintiffs may bring a direct action in this case because they suffered an injury “separate and distinct from other shareholders.” Op. at 1327. As the majority goes on to point out, however, courts have not adopted this “special injury” exception in cases like this one where all the shareholders, even the ones who received the illegal payments, were harmed by the misspending of corporate assets and the corresponding diminution in the value of shares. Op. at 1328. This reasoning also applies here. All the shareholders of Kake were injured by the financial security plan, many of them to an extent almost as great as the plaintiffs.[4] The fact that ten of the 575 shareholders received, through no fault of their own, a payment of $9,800 should not be allowed to alter the analysis of this case. As the plaintiffs correctly state, most shareholders “received an inexpensive distribution, a cheap insurance policy costing only a fraction of what the Cadillac policies cost.”

The court recognizes this crucial point when it states in the section of the opinion discussing its remedy: “[I]t is conceivable that requiring Kake to pay damages immediately and in a lump sum would disrupt Kake’s operations or prevent Kake from pursuing a profitable business opportunity. The result would be that all Kake shareholders would be injured.” Op. at 1328 (emphasis supplied). In other words, the court acknowledges that even though plaintiffs will benefit by receiving a damage award, they will also be harmed by the impact of that award on the value of their shares. This statement applies equally to the payments made under the plan and stands in contradiction to the majority’s statement that the “shareholders who received payments under the plan suffered no meaningful injury whatsoever.” Op. at 1327.

As its “second point supporting the contention that a direct action is appropriate,” the court asserts that “there are many reported cases concerning discriminatory distributions which proceeded as direct actions.” Op. at 1328. The six cases cited to support this statement, however, are distinguishable. In the first two, Amalgamated Sugar Co. v. NL Industries, 644 F. Supp. 1229, 1234 (S.D.N.Y. 1986) and Asarco, Inc. v. Holmes A. Court, 611 F. Supp. 468, 479-80 (D.N.J. 1985), the plaintiffs sought injunctions against ultra vires corporate acts. Such a direct action to enjoin the plan, rather than to recover monetary damages, would have been appropriate in this case.[5] See 12B Fletcher, supra p. 32, § 5915.10.

The rest of the cited cases deal with closely held corporations.[6] While some courts “recognize the right of a close corporation shareholder to sue directly . . . on a cause of action which would normally have to be brought derivatively,” 12B Fletcher, supra p. 32, § 5911.50, this court does not. Arctic Contractors, Inc. v. State, 573 P.2d 1385, 1386 n.2 (Alaska 1978) (stating that the “rule against individual shareholder suits also applies where all the stock in the corporation is held by one person or by a small number of people”). Even if we did recognize this exception, however, Kake is not a close corporation. Furthermore, the policy reasons for treating close corporations differently than other corporations in regard to direct actions do not support allowing a direct action in this case.[7]

Finally, the court attempts to address the “policy concerns” raised by its decision by instructing the superior court to make two findings. Op. at 1329. Rather than alleviate those concerns, however, the findings required by the majority highlight them, demonstrating even more clearly why the plaintiffs should not have been allowed to bring a direct action in this case. This court stated in Hikita, 713 P.2d at 1199, that one reason direct actions are not permitted where the harm is to the corporation is to protect “the prerogative of the board of directors to determine how the recovered damages should be utilized.” We have recognized that, because “[j]udges are not business experts, . . . courts are reluctant to substitute their judgment for that of the board of directors.” Alaska Plastics, Inc. v. Coppock, 621 P.2d 270, 278 (Alaska 1980). The majority opinion, however, orders the superior court to consider if Kake’s “operations or investment opportunities would be impaired if it were compelled to pay immediately the entire amount of the judgment.” Op. at 1329. This represents exactly the type of intrusion courts have traditionally avoided.

The court’s opinion also requires the superior court, if it “concludes that an immediate lump sum payment of damages would be inappropriate,” to “consider ordering Kake to suspend the payment of dividends to shareholders until Kake fully compensates the shareholders in the plaintiff class.” Op. at 1329. This suspension of dividends underlines that the majority of shareholders, whom the plaintiffs acknowledge suffered considerable discrimination under the plan, will fund the plaintiffs’ recovery. Thus, for these shareholders, the majority’s decision, rather than remedying the plan, continues it: Kake will now be forced to make more cash payments to yet another, larger group of select shareholders.

III. CONCLUSION

Kake erred in adopting its financial security plan. This mistake injured not only the plaintiffs, but all of those who own shares in the corporation. These individuals, who became corporate shareholders by Congressional action rather than through individual investment decisions, have a tremendous stake in the success of their corporation. Allowing plaintiffs to recover directly from the corporation is not only unfair to the rest of the shareholders, it is inconsistent with the principles of corporation law. Ironically, this same body of law that has so often been a stumbling block for Native corporations should, in this case, have worked in Kake’s favor. Therefore, I respectfully dissent.

Yellen v. Confederated Tribes of Chehalis Reservation

Synopsis 

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

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

Reversed and remanded.

Justice Alito joined in part.

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

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

Syllabus[*]

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

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

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

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

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

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

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

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

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

976 F.3d 15, reversed and remanded.

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

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


Attorneys and Law Firms

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

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

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

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

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

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

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

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

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

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

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

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


Opinion

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

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

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

I

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

A

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

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

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

B

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

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

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

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

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

C

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

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

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

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

II

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

A

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

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

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

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

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

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

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

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

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

B

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

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

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

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

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

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

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

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

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

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

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

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

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

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

C

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

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

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

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

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

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

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

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

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

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

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

D

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

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

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

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

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

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

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

III

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

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

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

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

IV

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

It is so ordered.


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

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

I

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

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

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

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

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

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

II

A

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

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

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

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

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

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

B

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

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

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

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

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

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

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

III

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

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

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

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

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

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

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

*

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

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

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