Alaska Supreme Court Opinions made Available by Touch N' Go Systems and Bright Solutions

Touch N' Go, the DeskTop In-and-Out Board makes your office run smoother. Visit Touch N' Go's Website.
  This site is possible because of the following site sponsors. Please support them with your business.
www.gottsteinLaw.com

You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Skaflestad v. Huna Totem Corp. (8/29/2003) sp-5732

Skaflestad v. Huna Totem Corp. (8/29/2003) sp-5732

     Notice:   This opinion is subject to correction  before
     publication  in  the  Pacific  Reporter.   Readers  are
     requested to bring errors to the attention of the Clerk
     of  the  Appellate  Courts, 303  K  Street,  Anchorage,
     Alaska 99501, phone (907) 264-0608, fax (907) 264-0878,
     e-mail corrections@appellate.courts.state.ak.us.


            THE SUPREME COURT OF THE STATE OF ALASKA

ALF R. SKAFLESTAD and         )
KARLENE GREENEWALD,      )    Supreme Court No. S-10353
for themselves and for all others       )
who are similarly situated,        )    Superior Court No.
                              )    1JU-00-0463 CI
               Appellants,         )
                              )
          v.                  )
                              )    O P I N I O N
HUNA TOTEM CORPORATION,  )
and HUNA TOTEM CORPORATION    )    [No. 5732 - August 29, 2003]
SHAREHOLDER SETTLEMENT   )
TRUST,                        )
                              )
               Appellees.          )
                                                                )


          Appeal  from the Superior Court of the  State
          of  Alaska, First Judicial District,  Juneau,
          Patricia A. Collins, Judge.

          Appearances:  Fred W. Triem, Petersburg,  for
          Appellants. Bruce E. Gagnon, Atkinson, Conway
          & Gagnon, for Appellee Huna Totem Corporation
          Shareholder  Settlement  Trust.   Daniel   G.
          Bruce, Baxter Bruce & Sullivan, P.C., Juneau,
          and  Barbra  Zan  Nault, Bankston,  Gronning,
          O'Hara, Sedor, Mills, Givens & Heaphey, P.C.,
          Anchorage,    for   Appellee    Huna    Totem
          Corporation.

          Before:   Fabe,   Chief  Justice,   Eastaugh,
          Bryner,  and Carpeneti, Justices.  [Matthews,
          Justice, not participating.]

          BRYNER, Justice.
I.   INTRODUCTION

            In  keeping  with  a  recommendation  by  Huna  Totem

Corporation's  board  of  directors, the  company's  shareholders

voted  to  put  a large sum of available funds into a  settlement

trust.  Certain shareholders later filed a class action, alleging

that proxy information Huna Totem sent them in creating the trust

was  materially  misleading because it failed to  disclose  that,

once  established, the trust could not be modified or  terminated

by shareholders unless two-thirds of its trustees recommended the

action.  After a bench trial, the superior court entered judgment

for  Huna  Totem,  finding  that,  although  some  of  its  proxy

information  was  incomplete and ambiguous, the totality  of  the

information was not materially misleading.  Because the  superior

court  applied the correct test of materiality and  the  evidence

supports  its  ruling,  we affirm the judgment  in  Huna  Totem's

favor.

II.  FACTS AND PROCEEDINGS

           Huna  Totem  Corporation is an Alaska  Native  village

corporation  organized under the Alaska Native Claims  Settlement

Act  (ANCSA).1  In 1993 Huna Totem entered into a tax  settlement

with the IRS that left the corporation with more than $35 million

in  unrestricted cash in 1994.  In debating what to do with these

funds,  Huna  Totem's board of directors grew interested  in  the

idea of establishing a settlement trust, and eventually the board

proposed that its shareholders dedicate the settlement funds to a

settlement trust.2

          In May 1994 the board sent shareholders an introductory

"Shareholder  Information  Packet"  describing  the  recent   IRS

settlement and introducing the idea of a settlement trust.   This

packet described the proposed trust in general terms, emphasizing

that  the  information  it contained was  "not  by  any  means  a

complete  discussion  of  all of the  important  aspects  of  the

Trust."  In addressing how the trust could be modified or changed

once  adopted, the packet said only that "[a]t periodic intervals

-   initially five years after the Trust is established, and then

once  every ten years thereafter -  the beneficiaries  could,  by

vote  of a two thirds of all units, choose to distribute some  or

all  of the accumulated income and principal, or to terminate the

Trust   entirely."    The   preliminary  packet   promised   that

"[s]hareholders will be hearing and learning more about the Trust

in  the  upcoming  months, and will receive additional,  detailed

information."

          In keeping with this promise, two months later, in July

1994,   Huna   Totem  sent  its  shareholders  a   formal   proxy

solicitation  that  covered  the  proposed  trust's  review   and

termination  provisions in far greater detail.  The  solicitation

explained  that, once established, the trust could be amended  or

ended  by shareholders only if the action was recommended by  the

trust's board of trustees:

          The  accumulated income and Settlement  Trust
          principal generally would not be available to
          be  distributed, except that five years after
          the Settlement Trust is established, and then
          once  every  ten years thereafter  -  upon  a
          recommendation of two-thirds of the trustees,
          ratified  by  a two-thirds vote of  the  unit
          holders,  some  or  all  of  the  accumulated
          income and principal could be distributed  or
          the  Settlement  Trust  could  be  terminated
          entirely.
          
This   explanation  mirrored  the  provisions  of  the   proposed

settlement  trust itself, the full text of which accompanied  the

July 1994 proxy solicitation as an appendix.

           After the corporation mailed the proxy solicitation in

late  July  1994,  members of its board  conducted  a  series  of

shareholder   workshops   to   discuss   the   proposed    trust.

Shareholders then overwhelmingly approved the trust proposal at a

special meeting in September 1994, and the trust was established.

          The five-year review began in January 2000.  Huna Totem

solicited  shareholder  comments  and  held  public  meetings  in

several cities.  The corporation also hired a research company to

survey  shareholders' opinions on the trust; this "survey  showed

that  a substantial majority of unit holders favored continuation

of the Trust, although many wanted some distribution of the trust

corpus."   In  March  2000  the trustees  voted  to  recommend  a

"relatively   small"   partial   liquidation   of   the    trust.

Shareholders were then sent an information packet and a ballot to

vote  on this recommendation.  They voted to ratify the trustees'

recommendation  by  a  six-to-one ratio.   The  settlement  trust

subsequently  paid shareholders distributions of $50  per  share,

totaling  roughly  $4.4 million; the rest of  the  trust  assets,

about  $40  million  by then, remained in the  settlement  trust,

subject to further review in ten years.

           Soon  after the board of trustees issued its five-year

recommendation, several dissatisfied shareholders filed the class

action  at  issue here, seeking to terminate and  invalidate  the

settlement  trust  in  its entirety because,  they  alleged,  the

information  provided to shareholders by Huna  Totem  before  the

trust  was adopted materially misled them concerning their  right

to  vote  on  the  issue  of termination.  In  particular,  these

shareholders argued that the proxy materials led them to  believe

that shareholders would have the unqualified right to vote on the

trust's  continued existence without regard to any recommendation

by  the trust's board of trustees.  The shareholders based  their

claims  in  large part on the preliminary packet  of  information

provided   to  shareholders  in  May  1994,  which  stated   that

shareholders "could" vote to review the trust in five  years  but

did not explain that the shareholder vote would be contingent  on

the  trustees'  recommendation.  According to  the  class  action

shareholders,  the  confusion  generated  by  these   preliminary

communications  was perpetuated by oral representations  made  by

directors  who  met with shareholders to answer  questions  after

Huna  Totem  mailed its formal proxy solicitation in  July  1994.

Huna  Totem  denied these allegations, claiming  that  its  proxy

materials accurately explained the five-year review process.

           After  a  four-day bench trial, Superior  Court  Judge

Patricia A. Collins ruled in favor of Huna Totem.  Although Judge

Collins  believed that "the actual Proxy Statement is  clear  and

unambiguous,"  she found that the "oral statements  by  directors

and  the  `brief'  review  of  the  proposed  trust  included  in

shareholder  materials  distributed  prior  to  the   vote   were

ambiguous in that they omitted information about the role of  the

trustees  in  the  review process and procedure regarding  future

shareholder votes to modify or terminate the trust."  But  noting

that, under Brown v. Ward, Alaska law deems proxy materials to be

materially  misleading or false only " `if there is a substantial

likelihood  that  a  reasonable  shareholder  would  consider  it

important in deciding how to vote,' "3 the judge found  that  any

information  omitted from Huna Totem's preliminary  materials  or

the  directors'  post-solicitation oral  communications  was  not

materially  misleading in light of "the total mix of  information

available  about  the  review  process."4   Furthermore,   though

emphasizing  that she was "not at all convinced that the  alleged

omissions  had  any  impact on the initial  vote  to  create  the

trust,"  Judge  Collins alternatively found that the  plaintiffs'

proposed remedies - setting aside the trust, an award of  nominal

damages,  and/or a revote on establishing the trust  -  would  be

barred  as  inequitable "[b]ecause of the long delay  in  seeking

court   intervention"  and  the  significant  harm   that   would

inevitably  result from " `unscrambling' the trust at  this  late

date."

          The plaintiffs/shareholders appeal.

III. DISCUSSION

     A.   Standard of Review

           The  two  central issues in this case  -  whether  the

superior  court  applied  the wrong  legal  test  in  determining

materiality  and  whether  the court erred  in  failing  to  find

material  misstatements  under  the  correct  legal  standard   -

primarily  present questions of law; but the issue of materiality

also  implicates  issues of fact.5  We review the  trial  court's

legal  determinations using our independent judgment  and  review

its factual determinations for clear error.6

     B.   Alaska Securities Law

          Alaska corporations created under ANCSA are exempt from

the federal Securities Act of 1933 and Securities Exchange Act of

1934.7   To  the  extent that the shareholders'  claims  are  not

directly  governed by ANCSA, then, they are controlled by  Alaska

law  rather  than federal securities law.8  Nevertheless,  as  we

held  in  Brown  v.  Ward, interpretations of  relevant  SEC  and

federal  common law prohibitions against material  falsehoods  in

proxy statements provide a "useful guide" in interpreting similar

securities issues arising under state law in ANCSA cases.9

           The Alaska Securities Act prohibits misrepresentations

of material fact in proxy solicitations:

          A  person  may not, in a document filed  with
          the  administrator or in a  proceeding  under
          this  chapter, make or cause to  be  made  an
          untrue  statement of a material fact or  omit
          to  state a material fact necessary in  order
          to  make the statements made, in the light of
          the  circumstances under which they are made,
          not misleading.[10]
          
Under   this   provision,   a  two-fold   analysis   applies   to

misrepresentation issues in proxy solicitation  cases,  requiring

courts  to  ask,  first,  whether  any  statements  amounted   to

misrepresentations  and, if so, whether those  misrepresentations

are  material  when considered "in the light of the circumstances

under which they are made."11

           The relevant definition of "misrepresentation," as set

forth  in 3 AAC 08.315(a), includes both positive statements  and

omissions:

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

qualify  as  misrepresentations  when  they  are  "misleading  or

false,"  and  "a  misleading or false statement `is  material  if

there  is  a substantial likelihood that a reasonable shareholder

would consider it important in deciding how to vote.' "12

     C.   Shareholders' Claims

          1.   Alleged misapplication of a scienter requirement

           The  shareholders first assert that  the  trial  court

erred  by  applying  the  wrong legal  standard  to  their  proxy

solicitation  claims.   Specifically, they claim,  Judge  Collins

imposed  a  scienter requirement and refused to impose  liability

because  she found that management did not intend to deceive  the

shareholders.   Huna  Totem does not dispute  that  it  would  be

improper  to  require  scienter in  determining  materiality  but

insists  that  Judge  Collins  applied  the  correct  materiality

standard and did not require scienter.  The record supports  Huna

Totem's position.

           The  shareholders  base  their  scienter  argument  on

several comments in the court's oral and written rulings in which

Judge  Collins expressed her view that the legal dispute  in  the

present  case was not the result of "bad people or bad  motives."

In  her  oral  decision, for example, Judge  Collins  prefaced  a

remark  about  the  shareholders'  request  for  declaratory  and

injunctive relief with the observation that there was an "absence

of  fraud  and intent to deceive."  When discussing the  evidence

concerning false and misleading proxy materials in her subsequent

written  findings, Judge Collins made the same  point,  stressing

that, "[a]s stated in [the] oral findings, the court is convinced

that  there  was  no  intent  by  the  directors  of  Huna  Totem

Corporation to mislead shareholders about the Settlement Trust."

           But as Huna Totem correctly points out, the challenged

comments concerning the corporation's lack of intent or bad faith

did  not address Judge Collins's application of the Brown v. Ward

materiality  test.  Rather, when read against the  background  of

the  decision as a whole, these comments reflect little more than

the  court's desire to mend the relationship between  Huna  Totem

and  its  shareholders,  which  the  court  described  as  having

degenerated into "finger pointing" and "name calling" during  the

trial.   Indeed,  in  her oral findings, Judge Collins  expressly

described her remarks on scienter as comments preliminary to  her

decision:

          Before  I enter my oral findings,  .  .  .  I
          think   it's  important  that  I  make   some
          preliminary observations about the  case  and
          about the persons involved in the case.  Many
          disputes  come  before the  court  where  the
          parties . . . attempt to portray the opposing
          party  as bad people with bad motives.   This
          case   is  no  different.   Those  kinds   of
          allegations  have been made.  I am  convinced
          that this case does not involve bad people or
          bad motives[.]
          
           And  although  the court returned  to  this  theme  at

several points in its oral and written findings, it directed  its

comments  not to the issue of materiality, but to the  "tenor  of

argument  and  discussion between the [parties]."   In  contrast,

when addressing the issue of materiality, Judge Collins described

and  applied  Brown v. Ward's objective "reasonable  shareholder"

test  with pinpoint accuracy, never mentioning or hinting at  any

consideration of motives or scienter.

                                                              The

                                                       shareholde

                                                       rs

                                                       nonetheles

                                                       s   insist

                                                       that  "the

                                                       court

                                                       directly

                                                       link[ed]"

                                                       its

                                                       decision

                                                       against

                                                       them    to

                                                       their

                                                       failure to

                                                       prove

                                                       scienter.

                                                       In support

                                                       of    this

                                                       claim,

                                                       they point

                                                       to    "one

                                                       particular

                                                       sentence"

                                                       toward the

                                                       end of the

                                                       oral

                                                       findings,

                                                       in   which

                                                       Judge

                                                       Collins

                                                       observed:

                                                       "Given the

                                                       absence of

                                                       fraud  and

                                                       intent  to

                                                       deceive

                                                       and    the

                                                       other

                                                       factors

                                                       I've

                                                       mentioned

                                                       here

                                                       today,   I

                                                       believe it

                                                       would   be

                                                       unfair and

                                                       unjust  to

                                                       grant  the

                                                       declarator

                                                       y      and

                                                       injunctive

                                                       relief

                                                       sought  by

                                                       the

                                                       plaintiffs

                                                       ."     But

                                                       the

                                                       shareholde

                                                       rs

                                                       overstate

                                                       the

                                                       significan

                                                       ce of this

                                                       reference

                                                       to

                                                       scienter.

                                                       For it had

                                                       nothing to

                                                       do    with

                                                       the

                                                       superior

                                                       court's

                                                       applicatio

                                                       n of Brown

                                                       v.  Ward's

                                                       objective

                                                       materialit

                                                       y    test;

                                                       instead,

                                                       by its own

                                                       terms, the

                                                       comment

                                                       focused

                                                       exclusivel

                                                       y on Judge

                                                       Collins's

                                                       alternativ

                                                       e    basis

                                                       for

                                                       ruling: as

                                                       we    have

                                                       described

                                                       above, the

                                                       judge's

                                                       alternativ

                                                       e   ruling

                                                       addressed

                                                       the

                                                       remedies

                                                       requested

                                                       in     the

                                                       lawsuit,

                                                       concluding

                                                       that  they

                                                       would   be

                                                       inappropri

                                                       ate   even

                                                       if     the

                                                       plaintiffs

                                                       had proved

                                                       a material

                                                       misreprese

                                                       ntation.

                                                       As   Judge

                                                       Collins

                                                       correctly

                                                       recognized

                                                       ,      the

                                                       plaintiffs

                                                       '  request

                                                       for

                                                       equitable

                                                       remedies

                                                       necessaril

                                                       y   raised

                                                       equitable

                                                       issues  on

                                                       which

                                                       scienter

                                                       had direct

                                                       bearing.

                                                       In

                                                       context,

                                                       then,

                                                       Judge

                                                       Collins's

                                                       comment

                                                       simply

                                                       confirms

                                                       her

                                                       understand

                                                       ing    and

                                                       correct

                                                       applicatio

                                                       n of Brown

                                                       v.  Ward's

                                                       objective

                                                       test    of

                                                       materialit

                                                       y.      We

                                                       thus  find

                                                       no   merit

                                                       in     the

                                                       shareholde

                                                       rs' claims

                                                       that Judge

                                                       Collins

                                                       wrongly

                                                       imposed  a

                                                       scienter

                                                       requiremen

                                                       t       in

                                                       deciding

                                                       the  issue

                                                       of

                                                       materialit

                                                       y.

          2.   Materiality of Huna Totem's omissions

           In  addition to claiming that the trial court  applied

the  wrong  legal test of materiality, the shareholders  maintain

that  the  proxy  materials are materially false  and  misleading

under the right standard.

           As previously noted,13 after hearing the testimony  at

trial  and  reviewing  the  various  documents  shareholders  had

received  regarding  the  trust, Judge Collins  determined  that,

while  some  of  the documents were ambiguous, their  ambiguities

were  not material.  Specifically, Judge Collins found that  Huna

Totem's July 1994 proxy solicitation gave shareholders a complete

and accurate picture of the periodic review process: "[T]he proxy

statement  and  the full text of the settlement  trust  that  was

submitted to the shareholders is neither overly simplified  [n]or

unclear."  Given the broad distribution and ready availability of

this  information,  the  court concluded,  "[t]he  total  mix  of

materials   submitted   to  the  Huna  Totem   shareholders   was

essentially accurate if to some degree overly simplified"; and in

the  court's view, any ambiguities or omissions in the  May  1994

preliminary  information  packet  or  in  the  directors'   post-

solicitation  oral presentations were immaterial under  Brown  v.

Ward's  objective  test,  which defines  a  misleading  or  false

statement  as  "  `material if there is a substantial  likelihood

that  a  reasonable shareholder would consider  it  important  in

deciding how to vote.' "14

            In   propounding  a  contrary  view  on  appeal,  the

shareholders concentrate primarily on the incompleteness  of  the

preliminary  information distributed in May 1994, insisting  that

the  confusion generated by this information sowed a lasting seed

of  ambiguity that violated the "clear statement rule"  and  Huna

Totem's  duties  of disclosure, completeness and candor;  omitted

facts  "so obviously important" to individual shareholders as  to

be  material as a matter of law; and should therefore be resolved

in  favor  of  the shareholders under ordinary rules of  contract

interpretation.

          But the shareholders' narrow focus on the trial court's

finding  of  an ambiguity in Huna Totem's preliminary information

impermissibly  views  that information in  isolation,  mistakenly

disregarding  the need to decide the materiality of a  particular

omission in light of the totality of available information.   For

as  we have already observed, the Alaska Securities Act expressly

requires  us  to  determine  the  materiality  of  a  statement's

omissions  contextually, rather than in isolation, by considering

whether the statement "omit[s] to state a material fact necessary

in  order  to  make  the statement[] made, in the  light  of  the

circumstances under which [it is] made, not misleading."15  Or as

Judge Collins more simply phrased it, the pertinent inquiry  here

was  whether "[t]he total mix of materials submitted to the  Huna

Totem shareholders was essentially accurate." (Emphasis added.)

           Here,  no matter how sketchy the corporation's initial

description  of  its proposed settlement trust  might  seem,  the

uncontroverted  facts  establish that  Huna  Totem's  preliminary

packet  of  information was labeled as a "brief introduction"  to

the   proposed   settlement  trust;  it  expressly   warned   the

shareholders   of  its  own  incompleteness  and  promised   more

information  to  follow.   Keeping  this  promise,   Huna   Totem

delivered  the  proxy  solicitation itself  -  the  most  crucial

document  -  which  provided  each  shareholder  a  complete  and

accurate summary of the proposed trust's review process, as  well

as a copy of the entire settlement trust document.

           Applying  Brown v. Ward's objective test to the  total

mix of available information, as the securities act requires,  we

conclude,  as  Judge  Collins did, that a reasonable  shareholder

considering the information actually provided would not have been

likely   to  find  the  information  omitted  from  Huna  Totem's

preliminary packet and  post-solicitation oral communications  to

be  important  in  deciding how to vote.16  We  thus  affirm  the

superior court's materiality ruling.17

          3.   Appropriateness of shareholders' proposed remedies

           Finally,  the  shareholders argue that  Judge  Collins

erred  in  her alternative ruling rejecting as inequitable  their

proposed  remedies of declaratory relief, injunctive relief,  and

nominal   damages.   Because  the  superior  court   issued   its

alternative  ruling  on the assumption that  Huna  Totem's  proxy

materials might ultimately be found to be materially misleading -

an  eventuality that has not materialized - we need not  consider

the superior court's alternative ground for decision.

IV.  CONCLUSION

          We AFFIRM the superior court's judgment.

_______________________________
1    43 U.S.C.  1601-1629h (1986 & Supp. 2003).
2      Under   Congress'  1987  amendments  to   ANCSA,   "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  the
Natives.'  "   Hanson v. Kake Tribal Corp., 939 P.2d  1320,  1332
(Alaska   1997)  (Fabe,  J.,  dissenting)  (quoting   43   U.S.C.
  1629e(b)(1) (Supp. 1994).  Settlement trusts offer  significant
tax advantages and insulate assets from creditors' claims.
3     Brown v. Ward, 593 P.2d 247, 251 (Alaska 1979) (quoting TSC
Indus., Inc., v. Northway, Inc., 426 U.S. 438, 449 (1976)).
4     Judge  Collins's core findings on ambiguity and materiality
are as follows:

          7.    While  the  actual Proxy  Statement  is
          clear  and  unambiguous, oral  statements  by
          directors  and  the  "brief"  review  of  the
          proposed   trust   included  in   shareholder
          materials distributed prior to the vote  were
          ambiguous  in  that they omitted  information
          about  the role of the trustees in the review
          process   and   procedure  regarding   future
          shareholder votes to modify or terminate  the
          trust.  Thus, the plaintiffs have established
          an omission in proxy materials including oral
          statements  and  the shareholder  information
          packet.
          
          8.     While  a  close  question,  the  above
          omissions  and/or  ambiguity  in   the   oral
          representations  and  brief  review  of   the
          proposed  Settlement Trust do  not,  however,
          meet  the  materiality standard of  Brown  v.
          Ward.    Specifically,  under  an   objective
          standard,     a     reasonable    shareholder
          considering  future review  of  a  trust  for
          purposes  of  modifying  or  terminating  the
          trust   would   reasonably  anticipate   some
          process or procedure would apply both to  the
          review  process and to the vote.   While  the
          "brief  review"  of the trust  in  the  April
          mailing  and oral representations likely  did
          not detail the process for future review,  it
          is   difficult  to  conclude  that  such   an
          omission    would   cause   an    objectively
          reasonable  shareholder to assume no  process
          would  be  followed and/or that a  "free  for
          all"  vote  on  modification  or  termination
          would occur.
          
          9.    While,  again, a close  question,  this
          court  cannot find[] on the particular  facts
          of  this  case  that there is  a  substantial
          likelihood   that  a  reasonable  shareholder
          would  have considered it important that  the
          five-year review process would entail  review
          and recommendation regarding trust changes by
          the  duly-elected  trustees  to  precede  any
          shareholder    vote   on   modification    or
          termination,  particularly in  light  of  the
          total mix of information available about  the
          review process.  Using an objective standard,
          a  reasonable  shareholder  who  thought  the
          precise  mechanism for review  was  important
          would  likely  have read the Proxy  Statement
          and/or  proposed Settlement Trust  Agreement,
          both  of  which detailed the role of trustees
          in  the review process and both of which were
          provided to shareholders.
          
(Footnote omitted.)

5    19 P.3d 597, 600-01 (Alaska 2001) ("We defer to the trial co
urt's factual findings unless clearly erroneous and review de  no
vo  any  questions of law.") .See 43 U.S.C. 5 1625  (1986  &  Sup
p. 2003).See
6     See  N.A. v. State, 19 P.3d 597, 600-01 (Alaska 2001)  ("We
defer  to  the  trial  court's factual  findings  unless  clearly
erroneous and review de novo any questions of law.") .
7    See 43 U.S.C.  1625 (1986 & Supp. 2003).
8    See Brown v. Ward, 593 P.2d 247, 249 (Alaska 1979).
9     Id.  at  250 ("Since the SEC fraud rule and the common  law
both prohibit material falsehoods, authorities construing the SEC
rule  are  a  useful guide in determining when a misstatement  is
material under Alaska common law.").
10    AS 45.55.160.
11    Id.
12     Brown,  593  P.2d  at 251 (quoting  TSC  Indus.,  Inc.  v.
Northway, Inc., 426 U.S. 438, 449 (1976)).
13    See note 4, above.
14     Brown,  593 P.2d at 251 (quoting TSC Indus., 426  U.S.  at
449).
15    AS 45.55.160 (emphasis added).
16    See Brown, 593 P.2d at 251 (quoting TSC Indus., 426 U.S. at
449).
17     Pointing  to  a  pattern of similar  descriptions  -  some
accurate, many incomplete  -  in various communications occurring
between  the time of the settlement trust's approval in 1994  and
the  first  five-year  review in 2000, the shareholders  maintain
that   the  continuing  ambiguity  and  inconsistency  of   these
statements  relates  back to the earlier communications,  somehow
confirming    their   originally   misleading   character.    The
shareholders  further  maintain  that  each  of  these  post-1994
repetitions of the 1994 promise of a shareholder vote amounted to
a  new  contract, creating a new cause of action.  Moreover,  the
shareholders seem to argue, by violating various common law rules
implicit  in  Brown v. Ward - a corporation's duty of disclosure,
its  duty  of completeness, its duty of candor, and its  duty  of
good  faith  and  fair  dealing  -  Huna  Totem's  original   and
subsequent materials became independently actionable.  But  these
common  law duties are largely incorporated in Alaska's statutory
standards  governing  material  misrepresentations.   Thus,   the
common  law  claims depend on the shareholders'  initial  premise
that  Huna  Totem's May 1994 preliminary statement was materially
misleading; they add little to the statutory claims and  fail  to
survive  our rejection of the shareholders' arguments on scienter
and materiality.