| Alaska Supreme Court Opinions made Available byTouch N' Go Systems and Bright Solutions |
|
|
|
| Alaska Supreme Court Opinions made Available byTouch N' Go Systems and Bright Solutions |
|
|
|
|
You can search the entire site. or go to the recent opinions, or the chronological or subject indices. Henrichs v. Chugach Alaska Corporation (8/26/2011) sp-6593
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, email
corrections@appellate.courts.state.ak.us.
THE SUPREME COURT OF THE STATE OF ALASKA
ROBERT J. HENRICHS, DERENTY )
TABIOS, and ROBERT E. BURK, ) Supreme Court No. S-12878
)
Appellants, ) Superior Court No. 3AN-05-11014 CI
)
v. ) O P I N I O N
)
CHUGACH ALASKA ) No. 6593 - August 26, 2011
CORPORATION, )
)
Appellee. )
)
Appeal from the Superior Court of the State of Alaska, Third
Judicial District, Anchorage, Craig F. Stowers, Judge.
Appearances: Fred W. Triem, Petersburg, for Appellants.
Robert H. Hume, Jr., Landye Bennett Blumstein LLP,
Anchorage, for Appellee.
Before: Carpeneti, Chief Justice, Fabe, Winfree, and
Christen, Justices, and Bolger, Justice pro tem.*
BOLGER, Justice pro tem.
* Sitting by assignment made pursuant to article IV, section 16 of the Alaska
Constitution.
----------------------- Page 2-----------------------
I. INTRODUCTION
Robert J. Henrichs, Derenty Tabios, and Robert E. Burk are shareholders
and former directors of Chugach Alaska Corporation who ran for election to the Chugach
board in 2005. These former directors sued Chugach because their names were excluded
from the board's corporate proxy materials and because Chugach did not provide them
with shareholder information for their own proxy campaigns within the time frame they
demanded. The superior court granted Chugach summary judgment on all claims and the
former directors now appeal. We affirmbecause Chugach was not required to deliver the
information the former directors demanded and because Chugach's conduct did not
otherwise violate their rights as board candidates.
II. FACTS AND PROCEEDINGS
Chugach is a corporation organized under Alaska law; its principal place
of business is in Anchorage. Chugach's governing body is a nine-person board of
directors whose members serve staggered, three-year terms. The shareholders nominate
and elect three directors each October at Chugach's annual shareholders' meeting.
For each annual meeting, Chugach uses a proxy system that allows
shareholders to vote for board directors without attending the meeting in person.
Shareholders send written proxies to Chugach's Inspector of Elections, giving the proxy
committee the authority to vote the shareholders' shares on their behalf. On the proxy,
a shareholder indicates the candidate or candidates for which the shareholder wants to
vote.
Prior to each meeting, Chugach's board of directors solicits proxies from
the shareholders. Each shareholder receives from the board a proxy statement explaining
the proxy system, a voter's guide providing information about candidates, and a proxy
form. The proxy form gives the shareholder the option to vote for a board-endorsed slate
of candidates or to allocate votes among candidates of the shareholder's choice.
-2- 6593
----------------------- Page 3-----------------------
Submitting an eligible and timely proxy typically makes a shareholder eligible for cash
prizes.
The proxy committee of Chugach's board, composed of the directors not
running for reelection, reviews the applications of candidates who wish to be endorsed
by the board and included in the proxy materials. It then recommends candidates to the
board, which decides whether to endorse the candidates in the proxy materials.
Henrichs and Tabios were members of Chugach's board of directors leading
up to the October 15, 2005 shareholders' meeting, at which time their seats were set to
expire. Each sought reelection. Burk had previously served as a director for Chugach,
and he also ran for election.
All three men applied to be board-endorsed candidates. The board rejected
their applications and informed them that their names would not be included in
Chugach's corporate proxy material. The board also informed them that they could run
as independent candidates and distribute their own proxy materials.
On August 21, 2005, Henrichs sent a letter to Chugach requesting a list of
shareholder addresses and the number of shares owned by each shareholder. Burk and
Tabios also sent letters to Chugach requesting the shareholder list. On September 1, after
receiving no reply, Henrichs filed suit in the superior court, claiming AS 10.06.430 and
AS 10.06.450(d) required Chugach to provide the shareholder information he sought.
Tabios joined the suit as a plaintiff five days later on September 6.
On September 7 Chugach emailed to Henrichs, Tabios, and Burk
shareholder lists that included the names, the number of shares held, and the addresses
for all shareholders. The emails explained that the record date - the date for
determining the shareholders entitled to vote at the 2005 annual meeting - was the
previous day, and that the shareholder lists were finalized at that time.
-3- 6593
----------------------- Page 4-----------------------
Chugach made its first motion for summary judgment on September 9,
claiming it had provided all of the information that Henrichs and Tabios requested.
In the meantime, Chugach proceeded with preparations for the 2005 annual
meeting. On September 9 Chugach sent out its proxy materials, which did not include
the information for Henrichs, Tabios, or Burk. The three men ran independent
campaigns: Henrichs and Tabios sent out joint proxy materials; Burk sent out his own.
None of the three was elected at the annual shareholders' meeting. The day after the
annual meeting, Henrichs and Burk wrote letters to the election inspector asking to
inspect the ballots cast at the annual meeting, but the inspector declined, citing the proxy
rules that required board approval to inspect the ballots after the adjournment of the
meeting.
In December 2005 the former directors filed an amended complaint adding
Burk as a plaintiff and adding various challenges to the 2005 election.
The following year, Burk and Henrichs requested shareholder information
for the 2006 annual meeting. Their letters requested that Chugach provide the
shareholder lists in an electronic file, including each shareholder's telephone number and
email address. In response, Chugach emailed to Burk and Henrichs an electronic
spreadsheet containing the names, mailing addresses, number of shares, and voting status
of all shareholders. But Chugach declined to provide the shareholders' telephone
numbers and email addresses.
At an August 2006 hearing, the superior court granted Chugach's first
motion for summary judgment. It ruled that Chugach provided the shareholder lists
within a reasonable amount of time and that the former directors had not attempted to
inspect the shareholder list at the corporation's registered office or principal place of
business as required. The superior court also accepted the former directors' amended
complaint. The former directors then filed another amended complaint, adding claims
-4- 6593
----------------------- Page 5-----------------------
relating to Chugach's refusal to provide the shareholders' email addresses and phone
numbers in 2006.
On November 17, 2006, Chugach filed a motion to dismiss all but two of
the former directors' claims. Chugach attached thirteen exhibits to the memorandum in
support of the motion. The superior court granted the former directors three extensions
of time to file their response. But eventually, the superior court granted the motion -
about two months after the third deadline passed without any response and more than a
month after Chugach notified the court that the motion was ripe.
The court's order dismissed all of the former directors' claims with the
exception of one relating to Chugach's "early bird prize" for prompt proxy returns and
another relating to Chugach's election rule requiring that proxies be separately returned
by mail. The court later clarified that it had treated the motion "as a summary judgment
motion" even though the motion was labeled as a motion to dismiss. Three days after the
motion was granted, the former directors filed a late opposition, attaching 25 exhibits.
They also requested reconsideration of the order dismissing their claims, which the court
denied.
The court later granted Chugach summary judgment on the two remaining
claims and entered a final judgment against the former directors. The former directors
now appeal.
III. DISCUSSION
A. Standard Of Review
"We review the grant of a summary judgment motion de novo, affirming
if the record presents no genuine issue of material fact and if the movant is entitled to
judgment as a matter of law."1 This de novo standard applies even when the motion is
1 Beegan v. State, Dep't of Transp. & Pub. Facilities, 195 P.3d 134, 138
(continued...)
-5- 6593
----------------------- Page 6-----------------------
not opposed in the trial court.2 "The interpretation of a statute is a question of law to
which we apply our independent judgment, interpreting the statute according to reason,
practicality, and common sense, considering the meaning of the statute's language, its
legislative history, and its purpose."3
B. The Superior Court Did Not Err When It Granted Summary
Judgment To Chugach.
The former directors do not identify any disputed issues of fact that
precluded summary judgment; instead, they advance numerous legal theories for why
Chugach's conduct surrounding the 2005 and 2006 elections violated their rights. The
former directors also argue that the superior court erred in treating Chugach's motion to
dismiss as a summary judgment motion without giving them notice, and in "taking a
default against" them because the motion was unopposed.
1. General principles of corporate law
The former directors argue that by favoring the board candidates, Chugach
violated fundamental democratic principles established by public election cases4 and
rules of equity that promote fair shareholders' meetings.5 But we conclude that we
1(...continued)
(Alaska 2008) (citingMatanuska Elec. Ass'n v. Chugach Elec. Ass'n, 152 P.3d 460, 465
(Alaska 2007)).
2 Newton v. Magill, 872 P.2d 1213, 1215 (Alaska 1994).
3 Parson v. State, Dep't of Revenue, Alaska Hous. Fin. Corp., 189 P.3d
1032,1036 (Alaska 2008) (citing Grimm v. Wagoner, 77 P.3d 423, 427 (Alaska 2003)).
4 See, e.g., Red Lion Broad. Co. v. FCC, 395 U.S. 367 (1969) (holding that
the regulation of broadcasters under the fairness doctrine enhanced the broadcasters'
right to free expression).
5 See, e.g., Revised Model Bus. Corp. Act § 7.08(c) (2005) ("Any rules
(continued...)
-6- 6593
----------------------- Page 7-----------------------
should refer to the Alaska statutes and regulations, and corporate bylaws that more
directly relate to the questions raised in this appeal.
The bylaws of a corporation may contain any provision "not in conflict with
law or the articles of incorporation," including "the time, place, and manner of calling,
conducting and giving notice of" shareholders' meetings and "the manner of execution,
revocation, and use of proxies."6 Article II of Chugach's bylaws gives the board of
directors the authority to conduct shareholders' meetings and to adopt rules for
shareholder meetings, the election of directors, and "the solicitation, filing, and
examination of proxies."
A director of a corporation such as Chugach generally must exercise
corporate duties "in good faith, in a manner the director reasonably believes to be in the
best interests of the corporation, and with the care, including reasonable inquiry, that an
ordinarily prudent person in a like position would use under similar circumstances."7
2. Shareholder list issues
The former directors argue that Chugach failed to provide the shareholder
information they sought in 2005 within a reasonable time, violating their right to
information as directors under AS 10.06.450(d)8 and their right to information as
5(...continued)
adopted for, and the conduct of, the meeting shall be fair to shareholders.").
6 AS 10.06.230(e).
7 AS 10.06.450(b).
8 AS 10.06.450(d) provides in relevant part:
A director has the absolute right at a reasonable time to
inspect and copy all books, records, and documents of every
kind and to inspect the physical properties of the corporation
(continued...)
-7- 6593
----------------------- Page 8-----------------------
shareholders under AS 10.06.430(b).9 Chugach argues that it provided the information
within a reasonable time, two days before it mailed out its own proxy statement and the
notice of the annual meeting. The superior court rejected the former directors' arguments
and granted summary judgment to Chugach on two alternative theories: (1) It concluded
that Chugach provided the information within a reasonable amount of time; and (2) it
concluded that the former directors had not "follow[ed] through on their stated intention
. . . to seek to inspect the shareholder list at the place of the registered office or principal
place of business."
Under AS 10.06.430(a), Chugach was required to keep "a record of its
shareholders, containing the names and addresses of all shareholders and the number and
class of the shares held by each." And under AS 10.06.430(b), Chugach was required
to make that record "reasonably available for inspection and copying" at the corporate
office by a shareholder "upon written demand stating with reasonable particularity the
8(...continued)
or a domestic or foreign subsidiary of the corporation.
Inspection by a director may be made in person or by agent
or attorney and the right of inspection includes the right to
copy and make extracts.
9 AS 10.06.430(b) provides:
A corporation organized under this chapter shall make its
books and records of account, or certified copies of them,
reasonably available for inspection and copying at the
registered office or principal place of business in the state by
a shareholder of the corporation. Shareholder inspection shall
be upon written demand stating with reasonable particularity
the purpose of the inspection. The inspection may be in
person or by agent or attorney, at a reasonable time and for a
proper purpose. Only books and records of account, minutes,
and the record of shareholders directly connected to the stated
purpose of the inspection may be inspected or copied.
-8- 6593
----------------------- Page 9-----------------------
purpose of the inspection." Also, under AS 10.06.450(d), any director of Chugach had
"the absolute right at a reasonable time to inspect and copy all books, records, and
documents of every kind." Both AS 10.06.430(b) and 10.06.450(d) allow for inspection
"in person or by agent or attorney."
As the superior court noted, the former directors did not seek to inspect the
shareholder information at Chugach's corporate office.10 The former directors argue that
AS 10.06.430(b) and 10.06.450(d) require the corporation to actively deliver the
shareholder records to directors or shareholders who request them.
"[T]he threshold question in ascertaining the correct interpretation of a
statute is whether the language of the statute is clear or arguably ambiguous."11 The
language of these statutes is clearly contrary to the former directors' position. Under
AS 10.06.450(d), directors have only the right to "inspect and copy" books, records, and
documents. And AS 10.06.430(b) provides shareholders with a right only to "inspection
and copying." There is no mention in either statute of a right to have books, records, or
documents delivered - electronically, by mail, or otherwise. The statutes require only
that corporations permit directors and shareholders to inspect and copy the records in
question.12
10 Henrichs expressed his desire "to examine the shareholders['] addresses and
make copies of them" in Chugach's office in an August 2005 letter, but there is no
indication in the record, or from the former directors, that Henrichs followed up on this
request.
11 FDIC v. Laidlaw Transit, Inc., 21 P.3d 344, 351 (Alaska 2001) (quoting K
Mart Corp. v. Cartier, Inc., 486 U.S. 281, 293 n.4 (1988)) (alteration in original).
12 Both statutes provide that the right to inspect can be exercised "by agent or
attorney," so there is no reason to interpret them as implying a right to delivery for a
director or shareholder who is unable to be physically present to inspect the records.
-9- 6593
----------------------- Page 10-----------------------
We therefore do not need to reach the issue of whether the time frame
within which Chugach provided the former directors the shareholder information was
reasonable. We hold that summary judgment was appropriate on the claims made under
AS 10.06.430(b) and 10.06.450(d) because the former directors did not attempt to inspect
and copy the 2005 shareholder records as required by these statutes.
The former directors also argue that these statutes required Chugach to
provide the shareholders' phone numbers and email addresses in 2006. Our holding that
these statutes only require corporations to permit inspection of corporate records disposes
of this argument. But we also note that none of the former directors was a Chugach
director in 2006, and that they therefore had no rights under AS 10.06.450(d) at that time.
We also note that AS 10.06.430(a) does not require a corporation to keep phone numbers
and email addresses in its shareholder record, so AS 10.06.430(b) does not require
corporations to permit shareholder inspection of that information.
3. Conversion of the motion to dismiss into a motion for summary
judgment
After the superior court had entered summary judgment on the shareholder
list issues, Chugach filed a motion asking the court to dismiss all but two of the
remaining claims. The motion was labeled as a motion to dismiss, but it was supported
by 13 exhibits. The critical exhibits were duplicates of exhibits that had been filed by the
former directors in support of their motion for partial summary judgment the previous
January. These exhibits included Chugach's articles of incorporation, its bylaws, its
proxy rules, the notice of the 2005 annual meeting, the 2005 voter's guide, Chugach's
2005 proxy form, its 2004 annual report, and the former directors' requests to inspect the
election ballots.13
13 The motion was also supported by the former directors' proxy statements,
(continued...)
-10- 6593
----------------------- Page 11-----------------------
The arguments in the motion to dismiss relied on these apparently
uncontested exhibits. The essence of Chugach's arguments was that the legal rules
embodied in these corporate documents authorized the board's actions with respect to the
shareholders' meetings discussed above. The memorandum attached to the motion noted
that Alaska Civil Rule 12(b) permitted the court to treat the motion as one for summary
judgment, and stated that summary judgment should be entered in favor of Chugach if
there was no genuine issue as to any material fact and if Chugach was entitled to
judgment as a matter of law.
Several months passed. The former directors submitted three motions for
extension of time, but they filed no response to the motion even two months after the
deadline they suggested in their final request. On March 27, 2007, the court granted the
motion to dismiss on the form provided by Chugach.
Three days after the order of dismissal, the former directors filed an
untimely response. Their response referred to the 25 exhibits that they had filed in
January 2006, including the main exhibits that Chugach relied on in its motion to
dismiss. The former directors also submitted 25 additional exhibits, enclosed with a
cover notice that indicated that the exhibits were submitted pursuant to Alaska Civil Rule
56.
In the untimely opposition, the former directors objected to summary
judgment and requested additional discovery , but they gave no indication about exactly
what discovery they were requesting, nor did they explain what steps they had already
13(...continued)
a letter from Henrichs, a timeline regarding the proxy filing deadline, and minutes of a
board meeting amending the 2005 deadline for filing proxies.
-11- 6593
----------------------- Page 12-----------------------
taken to conduct discovery.14 The text of their argument depended on exhibits - the
exhibits attached to Chugach's motion and those attached to the former directors'
response. The response did not include any indication that the former directors
controverted the facts stated in the exhibits attached to Chugach's motion; in fact, the
former directors asked the court to consider the exhibits they had filed in January 2006
because they "provide[d] a factual basis for denying the pending motion to dismiss."
The former directors now argue that the superior court erred in treating
Chugach's motion to dismiss as a summary judgment motion without giving them prior
notice, and in "taking a default against" them because the motion was unopposed.
Chugach argues that the former directors had adequate notice that the motion to dismiss
would be treated as a summary judgment motion, and that the superior court
appropriately considered the motion's merits rather than granting it simply by default.
Alaska Civil Rule 12(b) provides that, on a motion to dismiss, if "matters
outside the pleading are presented to and not excluded by the court, the motion shall be
treated as one for summary judgment and disposed of as provided in Rule 56." It further
provides that if a motion to dismiss is treated as a summary judgment motion, "all parties
shall be given reasonable opportunity to present all material made pertinent to such a
motion by Rule 56."
In other words, the superior court should give the non-moving party
advance notice that a motion to dismiss has been converted to a motion for summary
judgment so that the party can file an appropriate response.15 When the superior court
14 To receive a Rule 56(f) continuance, a party "must not have been dilatory
during discovery" and "must provide adequate reasons why additional time is needed."
Mitchell v. Teck Cominco Alaska Inc., 193 P.3d 751, 758 (Alaska 2008) (citing Hymes
v. DeRamus, 119 P.3d 963, 965 (Alaska 2005)).
15 See Demmert v. Kootznoowoo, Inc., 960 P.2d 606, 609-10 (Alaska 1998);
(continued...)
-12- 6593
----------------------- Page 13-----------------------
decides a motion under Rule 12(b)(6) without stating whether it is considering attached
materials, this court has three options: "[W]e may reverse and remand for proper
consideration, or we may review the superior court's decision as if the motion for
dismissal had been granted after exclusion of outside materials, or as if summary
judgment had been granted after conversion of the motion to dismiss into one for
summary judgment."16
In this case, the superior court did not give the former directors any prior
notice that it was converting the motion to dismiss into a motion for summary judgment.
We must then determine whether that lack of notice prejudiced the former directors when
they responded to the motion to dismiss. The critical issue is whether the former
directors, as the non-moving party, "could have availed themselves of the opportunity
to present evidence to oppose [the] motion if the superior court had expressly invited
them to do so."17
As noted above, the former directors told the court they "ha[d] not yet had
their discovery" and argued that the court had to give them "an adequate opportunity . . .
to submit additional proofs." But the former directors filed their own motion for
summary judgment on all of their claims - even those disposed of by the superior
court's March 2007 order - in late July 2007, months after they filed their untimely
response. The July 2007 motion relied upon the same exhibits they attached to their
untimely response to Chugach's motion to dismiss, including the exhibits they had filed
15(...continued)
see also Douglas v. Glacier State Tel. Co., 615 P.2d 580, 592 n.28 (Alaska 1980); Martin
v. Mears, 602 P.2d 421, 426 n.10 (Alaska 1979).
16 Kaiser v. Umialik Ins., 108 P.3d 876, 879(Alaska 2005) (quoting Reed v.
Municipality of Anchorage, 741 P.2d 1181, 1184 (Alaska 1987)).
17 Douglas, 615 P.2d at 592.
-13- 6593
----------------------- Page 14-----------------------
in January 2006. In other words, they produced no new evidence even after they had a
full opportunity to conduct discovery. From this we conclude that the former directors
would not have submitted additional evidence, even if they had been given an express
opportunity to do so.18
In this appeal, the former directors have asked us to review substantively
most of the issues that the superior court decided in the converted motion to dismiss. As
we determine these issues, we consider all of the exhibits that the former directors
submitted, including those filed after the superior court entered its order granting
Chugach's motion to dismiss. None of these exhibits raises any material issues of fact
precluding summary judgment. Because we conclude that summary judgment was
properly granted, the former directors suffered no prejudice from the conversion.
The former directors also argue that the superior court's written addendum
showed that the court entered summary judgment by default because of their failure to
file a timely response to Chugach's motion. Summary judgment should never be granted
by default: A motion for summary judgment may be granted only if it is "otherwise
appropriate" under Civil Rule 56(c).19 But the superior court explained that it did not
grant the motion by default; the court was convinced that there were no genuine issues
of fact and that Chugach was entitled to judgment as a matter of law. We agree with the
superior court's conclusion.
18 See Douglas, 615 P.2d at 592-93.
19 Martinez v. Ha, 12 P.3d 1159, 1162 (Alaska 2000) (quoting Newton v.
Magill, 872 P.2d 1213, 1215 (Alaska 1994)).
-14- 6593
----------------------- Page 15-----------------------
4. Proxy statement issues
The former directors make a number of arguments about the propriety of
Chugach's 2005 proxy statements. They argue that Chugach failed to disclose that the
election was contested and omitted the former directors' names in its proxy materials,
thereby violating Alaska law. Chugach argues that it was not required to include the
former directors' names in its proxy literature.
As a corporation under the Alaska Native Claims Settlement Act
(ANCSA),20 Chugach is subject to Alaska's proxy regulations for ANCSA corporations21
but not federal proxy regulations. Under the state regulations a proxy statement may not
contain any material misrepresentations.22 Also, a corporate board's proxy statement
must include "a description of each nominee of the board . . . and of each director whose
term of office will continue after the shareholders' meeting."23
Chugach was not required to include the former directors in the proxy
statement because the board did not nominate them. And although Henrichs and Tabios
were incumbent directors, Chugach was not required to include their names because their
terms were scheduled to expire and therefore would not "continue after the shareholders'
meeting."
The former directors also argue that Chugach's 2005 proxy statement did
not disclose the compensation for the chairman and directors and other financial
information about the corporation. The proxy regulations do require a statement of the
20 43 U.S.C. § 1602 (2000); 43 U.S.C. § 1606 (2008).
21 3 Alaska Administrative Code (AAC) 08.315-.365 (1988).
22 3 AAC 08.315(a).
23 3 AAC 08.345(b)(1) (emphasis added); see also 3 AAC 08.335(e)(1).
-15- 6593
----------------------- Page 16-----------------------
individual compensation for the five most highly compensated officers.24 But Chugach's
2005 proxy statement complied with this regulation, listing the compensation for the
corporation's president and chief executive officer, its chief financial officer, its vice
president, its controller, and its director of government services.
The proxy regulations also require a statement of remuneration for all
officers and directors as a group "without naming them."25 Chugach's 2005 proxy
statement complied with this regulation, stating the "total remuneration distributed or
accrued to the 27 officers and directors of [Chugach] and its subsidiaries during the fiscal
year."
The former directors also argue that the proxy statement did not state the
net value per share of stock. But a statement of value per share is not required by the
proxy regulations.26 Nonetheless, Chugach provided equivalent information: The proxy
statement provided the number of shares outstanding, and the annual report stated the
total value of the shareholders' equity. In summary, the proxy statement complied with
all of the applicable proxy regulations regarding notice of compensation and other
financial data.
The former directors also argue that Chugach acted illegally when it offered
eligibility for early-bird prizes to shareholders who returned their proxies for "any proxy
holder or candidate" by September 23, 2005.27 They argue that this incentive is an illegal
"distribution" in violation of various sections of the corporations code that discourage
24 3 AAC 08.345(b)(2)(A).
25 3 AAC 08.345(b)(2)(B).
26 See 3 AAC 08.345(a)-(b).
27 This early-bird issue is not affected by the conversion issue discussed in
section III.B.3 above. The superior court granted summary judgment on the early-bird
issue in response to a separate motion.
-16- 6593
----------------------- Page 17-----------------------
discrimination between holders of shares of the same class and series of stock.28 They
also argue that the prizes were "vote buying" and that the deadline for eligibility was
unfair.
A shareholder "distribution" is defined as "the transfer of cash or property
. . . without consideration, whether by way of dividend or otherwise."29 The prizes are
not "distributions" under this definition because eligibility for the prizes was granted in
exchange for consideration: the early return of a valid proxy.30
Chugach's bylaws authorize this type of incentive (and the corresponding
deadline) under the board's authority to adopt rules for the solicitation of proxies, and
the incentive did not favor any candidate.
5. Other shareholders' meeting claims
The former directors also make a number of arguments in connection with
the 2005 shareholders' meeting. They argue that the staggered terms for Chugach board
31
members were illegal. But staggered terms are expressly permitted by AS 10.06.455(a).
28 See, e.g., AS 10.06.305(b), .313, .542.
29 AS 10.06.990(17).
30 See Demmert v. Kootznoowoo, Inc., 45 P.3d 1208, 1212 (Alaska 2002)
(corporate encouragement for shareholder employment including transportation costs was
not a discriminatory "distribution").
31 AS 10.06.455(a) provides in pertinent part:
If the board consists of three or more members, the articles of
incorporation may provide that instead of electing all the
directors annually the directors be divided into either two or
three classes, each class to be as nearly equal in number as
possible, with the term of office of directors of the first class
to expire at the first annual meeting of shareholders after their
election, that of the second class to expire at the second
(continued...)
-17- 6593
----------------------- Page 18-----------------------
The former directors argue that Chugach "delays its annual meeting so far
after the close of its fiscal year that shareholders do not have current financial data with
which to evaluate the incumbents." But there is nothing in the record indicating that
Chugach violated the requirements for distribution of its annual report.32 And the law
dealing with the scheduling of shareholders' meetings provides only that meetings "shall
be held at the time as provided in the bylaws."33 Chugach's bylaws provide that the
annual meeting will be held on the "second Saturday in October of each year," and that
is when the meeting was held in 2005.
The former directors argue that their right to inspect corporate records
included a right to review and inspect the ballots from the election held at the 2005
annual meeting, and that Chugach violated that right. But Chugach's proxy rules
provided that "after adjournment of the annual meeting" the inspector was required to
maintain the ballots and to prohibit inspection "except upon written authorization from
the Corporation in the form [of] a certified board resolution." This rule falls within the
board's authority to provide for the election of directors.34 Henrichs and Burk each wrote
letters to the election inspector requesting to inspect the ballots cast at the meeting, but
neither sought authorization from the board.
The motion to dismiss we discuss in section III.B.3 above included two
claims that the former directors did not separately address in their appeal brief - claims
31(...continued)
annual meeting after their election, and that of the third class,
if any, to expire at the third annual meeting after their
election.
32 See AS 10.06.411(a), .433(a).
33 AS 10.06.405(b).
34 AS 10.06.230(e).
-18- 6593
----------------------- Page 19-----------------------
related to a one-day change in the proxy deadline and assertions in Chugach's
supplemental proxy statement. We see noprejudice in the conversion of the motion with
respect to these issues. The proxy rules expressly permitted the board of directors to
change the time by which proxies were due. The former directors suffered no prejudice
from the change in the proxy deadline because the new date conformed to the deadline
printed on their own proxy statements.
With respect to the supplemental proxy statement, the former directors
alleged in their amended complaint that the statement cast their lawsuit in an unfair light.
But in their untimely response to the motion to dismiss, they failed to discuss this issue
at all. We have independently reviewed the record and find no issue of fact precluding
summary judgment on this claim.
The former directors make various other complaints about Chugach's
conduct regarding the annual meeting. But none of these complaints appears to involve
misconduct that violated any provision of Alaska law or the corporate bylaws.
IV. CONCLUSION
For these reasons we AFFIRM the superior court's orders granting
summary judgment and dismissing the former directors' claims against Chugach Alaska
Corporation.
-19- 6593
 |
| Case Law Statutes, Regs & Rules Constitutions Miscellaneous |
|
