Justia Alaska Supreme Court Opinion SummariesArticles Posted in Corporate Compliance
Pederson v. Arctic Slope Regional Corporation
A corporate shareholder alleged the corporation violated his statutory right to inspect certain records and documents. The superior court found that the shareholder did not assert a proper purpose in his request. The shareholder appealed, arguing the superior court erred by finding his inspection request stated an improper purpose, sanctioning him for failing to appear for his deposition, and violating his rights to due process and equal protection by being biased against him. After review, the Alaska Supreme Court reversed the superior court’s order finding that the shareholder did not have a proper purpose when he requested the information at issue from the corporation, but it affirmed the superior court’s discovery sanctions. View "Pederson v. Arctic Slope Regional Corporation" on Justia Law
Borer v. Eyak Corporation
A winning candidate for a seat on the board of directors of an Alaska Native Corporation declined to sign the corporation’s confidentiality agreement and code of conduct. When the corporation denied him a seat on the board, he sought a declaratory judgment that these agreements were unlawful and an injunction that he be seated on the board. He argued that the scope of the confidentiality agreement was so broad, and the code of conduct so apt to be used to suppress dissenting directors, that they were inconsistent with directors’ fiduciary duties to the corporation. The Alaska Supreme Court determined he did not challenge the application of these agreements to any concrete factual situations, therefore, his claims were not ripe for adjudication. The Court therefore affirmed the judgment and the award of attorney’s fees against him. View "Borer v. Eyak Corporation" on Justia Law
Farthest North Girl Scout Council v. Girl Scouts of the United States of America
The Board of Directors of the Girl Scouts of the United States of America increased the amount of annual membership dues. Farthest North Girl Scout Council, its executive director, and the chair of its board of directors challenged this increase, claiming that the corporation’s governing documents did not give the Board authority to increase membership dues. The superior court denied Farthest North’s motion for summary judgment, ruling in favor of the Girl Scouts of the United States of America that the Board had such authority. The Alaska Supreme Court disagreed, finding the corporate governing documents vested authority to establish membership dues solely in the National Council of the Girl Scouts of the United States of America. View "Farthest North Girl Scout Council v. Girl Scouts of the United States of America" on Justia Law
Baker v. Duffus
After a limited liability company and its individual members failed to make payments on a real estate loan, the lender sued. One member, Kenneth Duffus, cross-claimed against a second member, Lee Baker, Jr., alleging breach of contract and tort claims related to the management of the business. Baker counterclaimed against Duffus, also alleging breach of contract and tort claims. After several years of litigation, only the claims by and between Duffus and Baker remained; the superior court granted partial summary judgment to Duffus, finding that the statutes of limitation barred Baker’s counterclaims. A trial jury found against Baker on Duffus’s breach of contract and tort claims, and awarded damages to Duffus. Baker appealed the grant of summary judgment and a number of procedural issues from the trial. Because the Alaska Supreme Court determined it was error to conclude that Baker’s claims were not compulsory counterclaims, thus changing the statutes of limitation analysis, it reversed the superior court’s grant of summary judgment, vacated the judgment, and remanded for a new trial on both Duffus’s cross-claims and Baker’s counterclaims. View "Baker v. Duffus" on Justia Law
Pederson v. Arctic Slope Regional Corporation
A corporate shareholder sought a shareholder list to mail proxy solicitations for an annual director election. The corporation required a signed confidentiality agreement in exchange for releasing the list. After obtaining and using the list, the shareholder later declared the agreement unenforceable, and refused to return or destroy the list. The corporation sued, seeking to that the shareholder had breached the confidentiality agreement and that the corporation was not obligated to provide the shareholder access to its confidential information for two years. After the superior court refused to continue trial or issue written rulings on the shareholder’s two pending summary judgment motions, the shareholder declined to participate in the trial. The court proceeded, ruled in favor of the corporation, and denied the shareholder’s subsequent disqualification motion. The shareholder appealed. The Alaska Supreme Court determined the superior court did not err in determining the shareholder had materially breached a valid, enforceable contract and did not err or abuse its discretion in its pretrial decisions or in denying the post-trial disqualification motion. But because the declaratory relief granted by the superior court regarding the shareholder’s statutory right to seek corporate information no longer pertained to a live controversy, the Court vacated it as moot without considering the merits. View "Pederson v. Arctic Slope Regional Corporation" on Justia Law
Pederson v. Arctic Slope Regional Corp.
A shareholder of Arctic Slope Regional Corporation sought to exercise his statutory right to inspect books and records of account and minutes of board and committee meetings relating to executive compensation and an alleged transfer of equity in corporate subsidiaries to executives. The Corporation claimed that the materials were confidential and sought to negotiate a confidentiality agreement prior to release of any documents. When the shareholder ultimately rejected the proposed confidentiality agreement, the Corporation released to the shareholder only the annual reports and proxy statements of the Corporation and the minutes describing the subjects discussed and actions taken at the meetings. The shareholder did not receive the detailed, individualized compensation information he sought. The shareholder sued, claiming that the Corporation withheld information that statutorily it was required to release, and that the Corporation improperly insisted on a confidentiality agreement prior to releasing any of the requested documents. The superior court ruled that electronically maintained accounting records were not within the statutory category of "books and records of account"; that the Corporation satisfied the requirement to disclose "books and records of account" when it disclosed only annual reports and proxy statements; and that the Corporation satisfied the requirement to disclose meeting minutes. Furthermore, the court concluded that the Corporation could demand a confidentiality agreement prior to release of any information, and that the terms of the particular confidentiality agreement offered in this case were reasonable. The shareholder appealed, arguing that the statutory right of inspection encompasses more than what the Corporation provided and that the Corporation had no right to demand the confidentiality agreement in this case. This appeal presented several issues of first impression in Alaska. Upon review, the Supreme Court held: (1) the statutory phrase "books and records of account" includes electronically maintained books and records of account; (2) the statutory phrase also goes beyond mere annual reports and proxy statements; and (3) the statutory phrase at least encompasses monthly financial statements, records of receipts, disbursements and payments, accounting ledgers, and other financial accounting documents, including records of individual executive compensation and transfers of corporate assets or interests to executives; (4) the statutory category "minutes" does not encompass all presentations or reports made to the board but rather merely requires a record of the items addressed and actions taken at the meeting, as have been faithfully recorded after the meeting; and (5) a corporation may request a confidentiality agreement as a prerequisite to distributing otherwise-inspectable documents provided that the agreement reasonably defines the scope of confidential information subject to the agreement and contains confidentiality provisions that are not unreasonably restrictive in light of the shareholder's proper purpose and the corporation's legitimate confidentiality concerns. The Court found that the Corporation's proffered confidentiality agreement in this case was not sufficiently tailored or limited in scope and thus the shareholder's refusal to sign it could not serve as a legal basis for avoiding liability for denying his inspection claims. View "Pederson v. Arctic Slope Regional Corp." on Justia Law
Rude v. Cook Inlet Region, Inc.
Robert Rude and Harold Rudolph were shareholders and former directors of Cook Inlet Region, Inc. (CIRI). They distributed a joint proxy solicitation in an attempt to be elected to the CIRI board of directors at CIRI’s 2010 annual meeting. Rude and Rudolph accumulated over one quarter of the total outstanding votes, but CIRI’s Inspector of Election refused to allow them to cumulate their votes. Thus, votes were split evenly between the two of them and neither was seated. Upon review of the matter, the Supreme Court concluded that the language of the proxy form required the shareholders’ votes to be equally distributed between Rude and Rudolph unless a shareholder indicated otherwise. Therefore the Court affirmed the superior court’s decision granting summary judgment in favor of CIRI on this issue. View "Rude v. Cook Inlet Region, Inc." on Justia Law
Gefre v. Davis Wright Tremaine, LLP
Shareholders of a closely held corporation brought a derivative suit against a shareholder-director and the corporation's former attorneys for fiduciary fraud, fraudulent conveyance, legal malpractice, and civil conspiracy. After an evidentiary hearing, the superior court ruled all the claims were time-barred. Upon review of the matter, the Supreme Court affirmed the superior court's dismissal of most claims, but reversed its dismissal of two and remanded those claims for further proceedings. View "Gefre v. Davis Wright Tremaine, LLP" on Justia Law
Calais Company, Inc. v. Kyzer Ivy
In 2007, a shareholder of Calais Company, Inc., Deborah Kyzer Ivy, filed a complaint against Calais seeking involuntary corporate dissolution. In May 2009, Ivy and Calais reached a settlement agreement in which Calais agreed to purchase Ivy's shares at "fair value" as determined by a three-member panel of appraisers. The appraisers disagreed over the fair value of the company. Calais sought to enforce the Agreement in superior court, arguing the two majority appraisers had failed to comply with the appraisal procedure mandated by the Agreement and the Agreement's definition of "fair value." The superior court ultimately declined to rule on the issue, concluding that interpreting the term "fair value" was beyond its scope of authority under the terms of the Agreement. Consequently, the court ordered Calais to purchase Ivy's shares based on the majority appraisers' valuation. Calais appealed. Upon review of the matter, the Supreme Court reversed the superior court's final order and remanded for the court to remand to the appraisers with explicit instructions to calculate the "fair value" as defined by AS 10.06.630(a), as required by the Agreement. View "Calais Company, Inc. v. Kyzer Ivy" on Justia Law
Rude v. Cook Inlet Region, Inc.
In 2008 Robert Rude, then a sitting Cook Inlet Region, Inc. (CIRI) director, and three other candidates ran as an independent “New Alliance” slate for positions on the CIRI board of directors. Shortly before the election, CIRI filed suit, claiming that the New Alliance proxy materials contained materially misleading statements. Rude and his co-defendants counterclaimed, alleging that CIRI’s election procedures were unfairly tilted toward the interests of the current board and that the directors had improperly refused to disclose shareholder and corporate information to Rude and the other New Alliance candidates. The superior court granted summary judgment on all claims and counterclaims in favor of CIRI. As a result, the New Alliance proxies were voided, and Rude was not re-elected to the board. Rude appealed the rulings both on CIRI’s claims and his counterclaims. Although Rude’s claims were technically moot, the Supreme Court addressed them insofar as they potentially affected prevailing party status. Because no issue of material fact existed as to the claims at issue and because CIRI is entitled to judgment as a matter of law, the Supreme Court affirmed the superior court. In a separate appeal, Rude challenged four other rulings of the superior court: (1) the award of attorney’s fees to CIRI; (2) denial of his Rule 60(b) motion for relief from judgment; (3) the superior court’s exclusion of exhibits filed with that motion; and (4) dismissal of New Alliance as a party to this suit. Because the superior court did not abuse its discretion in any of these rulings, the Supreme Court affirmed the superior court in all respects. View "Rude v. Cook Inlet Region, Inc." on Justia Law