FABE, Justice.
In 2008 Robert Rude, then a sitting Cook Inlet Region, Inc. (CIRI) director, and three other candidates ran as an independent "New Alliance" slate for positions on the CIRI board of directors. Shortly before the election, CIRI filed suit, claiming that the New Alliance proxy materials contained materially misleading statements. Rude and his co-defendants counterclaimed, alleging that CIRI's election procedures were unfairly tilted toward the interests of the current board and that the directors had improperly refused to disclose shareholder and corporate information to Rude and the other New Alliance candidates. The superior court granted summary judgment on all claims and counterclaims in favor of CIRI. As a result, the New Alliance proxies were voided, and Rude was not re-elected to the board. Rude appeals the rulings both on CIRI's claims and his counterclaims. Although Rude's claims are now technically moot, we address them insofar as they potentially affect prevailing party status. Because no issue of material fact exists as to the claims at issue and because CIRI is entitled to judgment as a matter of law, we affirm the superior court.
In a separate appeal, Rude challenges four other rulings of the superior court. First, he challenges the award of attorney's fees to CIRI. Second, he challenges the superior court's denial of his Rule 60(b) motion for relief from judgment. Third, he challenges the superior court's exclusion of exhibits filed with that motion. Finally, he challenges the superior court's dismissal of New Alliance as a party to this suit. Because the superior court did not abuse its discretion in any of these rulings, we affirm the superior court in all respects.
Cook Inlet Regional, Inc. (CIRI) is an Alaska Native Claims Settlement Act (ANCSA) corporation organized under Alaska law. It is governed by a 15-member board of directors, serving staggered three-year terms. Each year five director positions are up for election by the shareholders, and each year the board of directors recommends five candidates for the shareholders' vote and solicits proxies
For the 2008 elections, Robert Rude, as well as Dorothy J. Anagick, Chris Kiana, and Mike Thomas, ran for seats on the board.
Under CIRI's rules, individuals who wish to run for the board of directors, but who are not included in the board-endorsed slate, may still be included in CIRI's proxy materials. Such individuals are listed, along with their photographs and background information, in CIRI's proxy statements;
On March 28, 2008, New Alliance began soliciting proxies on behalf of the four candidates and for a New Alliance proposal for a special dividend of $50 per share.
Shortly after New Alliance sent its first proxy materials, CIRI filed a complaint with the Division of Banking, Securities and Corporations, alleging that New Alliance's proxy solicitations contained false and misleading statements concerning, most importantly, CIRI's alleged failure to pay adequate dividends in the past. While CIRI, New Alliance, and the Division communicated back and forth regarding CIRI's complaint to the Division,
These additional New Alliance mailings, as well as the New Alliance website, contained a number of statements which CIRI believed to be false or misleading. These statements, described in more detail below, concerned, among other things, management compensation, allegations that CIRI had "liquidated" or sold significant landholdings, shareholders' rights under Alaska law and ANCSA, CIRI's election procedures, and CIRI's dividend policy. In CIRI's words, the statements as a whole gave the false impression that "[a]lthough CIRI as a corporation has done well in earning a profit over the years, the CIRI Board majority (and management) have refused to share the corporation's success with
Meanwhile, starting in April 2008, CIRI began soliciting its own proxies. CIRI's first proxy solicitation included a proxy statement, including biographies of the board-endorsed candidates as well as three "other candidates." The proxy statement also included information about continuing directors (i.e., those not up for re-election) and corporate information, including information about the current board of directors and election procedures. The enclosed proxy included the names of the five board-recommended candidates, as well as the three "other candidates" and a blank line labeled "Write-In Candidates." The proxy did not include a space for shareholders to vote on New Alliance's proposed special dividend.
CIRI's second proxy mailing, mailed approximately one week after the first, included a voter guide with more in-depth information about the eight candidates on the proxy, along with CIRI's annual financial report, a flyer in support of the board-endorsed candidates, and another proxy form with the same information as the first. CIRI subsequently sent two more mailings that included proxy forms and information supporting its endorsed candidates. Throughout its proxy mailings, CIRI touted its "Early Bird Prizes" — cash prize drawings for shareholders who returned proxies "for any proxy holder or candidate" before the May 30 deadline.
On June 5, two days before the scheduled shareholder meeting, CIRI filed suit against Rude, Anagick, Kiana, Thomas, and New Alliance, alleging that their proxy materials contained numerous false and misleading statements. The suit sought to void the New Alliance proxies.
Before the New Alliance candidates could respond, the shareholder meeting was held, and Rude and Thomas had the most votes to win election to the board. At the meeting, Thomas proposed the special dividend of $50 per share, but it was defeated when CIRI voted its proxies against the measure.
Following the election, the New Alliance candidates answered CIRI's complaint and filed numerous counterclaims. In its counterclaims, New Alliance
CIRI moved for summary judgment on its claims against New Alliance. New Alliance moved for partial summary judgment on its counterclaims against CIRI, and CIRI filed a cross-motion for partial summary judgment on the counterclaims. The superior court granted summary judgment in favor of CIRI on both sets of claims.
In her ruling on CIRI's motion for summary judgment on the claims against New Alliance, pro tem Superior Court Judge Morgan Christen found that five sets of statements in New Alliance's proxy solicitation materials were misleading as a matter of law.
Second, the superior court found materially misleading New Alliance's claims that CIRI was being "liquidated" and that CIRI land entitlements had been reduced by 700,000 acres of surface and 1,000,000 acres of subsurface estate. The superior court determined that these statements were misleading because there was no evidence in the record to support New Alliance's contention that CIRI was being liquidated or selling off such significant landholdings. The superior court further found that New Alliance did not have a good-faith basis for such a belief. The superior court found that these statements were material as a matter of law "because a reasonable shareholder would of course consider it important when deciding how to vote if he/she understood that 700,000 acres of surface estate and 1,000,000 acres of subsurface estate had been liquidated without explanation."
Third, the superior court found materially misleading New Alliance's statement that
The superior court concluded that these statements were misleading because they suggested that shareholders had a right to participate in CIRI's management decisions and that "the board [was] improperly denying shareholders' input into corporate governance." Instead, the superior court noted, "under Alaska law, the board of directors, not shareholders[,] has the right to make ... management and operational decisions." The superior court found that New Alliance's statements to the contrary were material because "[t]here is a substantial likelihood that a reasonable shareholder would consider the statement about shareholders' voting rights important in deciding how to vote."
Fourth, the superior court found materially misleading New Alliance's statements that "New Alliance candidates have to pay their own election expenses" and "[i]ndependent candidates ... have to pay their own campaign expenses which often cost an independent candidate tens of thousands of dollars and, if elected, they are not reimbursed their campaign expenses." The superior court concluded that these statements were misleading because the New Alliance candidates could have had some of their campaign expenses paid for if they had chosen to follow CIRI's procedures for being included in CIRI's proxy materials as "other candidates" and because CIRI did pay for some of the expenses for Rude to attend an informational meeting for shareholders in Washington. The superior court found that these statements were material as a matter of law because there was "a substantial likelihood that a reasonable shareholder would consider th[ese] statement[s] important in deciding how to vote ... [because they] perpetuate[d] the theme that minority board members are being treated unfairly by the majority."
Fifth, the superior court found materially misleading New Alliance's statements that "never again will a hardcore minority of 6 directors control our corporation." Although New Alliance claimed it was referring to one faction's de facto control of the board, the superior court concluded that this statement was misleading because "[a] minimum of
The superior court concluded that because the misrepresentations in New Alliance's proxy materials were sufficiently "egregious," the proxies given to New Alliance "must be declared void." Because the New Alliance proxies were declared void, Rude and Thomas, who had previously collected enough proxies to win election to the board of directors, were removed from their seats.
On the same day that it granted CIRI's motion for summary judgment, the superior court also granted CIRI's cross-motion for partial summary judgment on New Alliance's counterclaims and denied New Alliance's motion for partial summary judgment. Based on its understanding of New Alliance's motion, the superior court identified eight claims in the motions before it, of which only the first five are raised in this appeal. Those claims were whether CIRI violated Alaska securities law and common law proxy rules by:
As to the first issue, the superior court noted:
The superior court found that all three of these requirements had been met. The superior court noted that CIRI had filed a sworn statement that its financial statement was not yet ready when CIRI sent its first proxy mailing. The superior court found that, although New Alliance asserted that CIRI had the necessary information to publish its annual report before it solicited proxies, there was no evidence to support this, and the superior court therefore determined that CIRI had met the first prong. The superior court then noted that there was no dispute that CIRI had satisfied the second prong. Finally, the superior court noted that CIRI's initial proxy statement included an undertaking to furnish the annual report to shareholders at least 50 days before the annual meeting. Although New Alliance alleged that voters should not be asked to vote before they have information that a reasonable shareholder would view as significant in deciding how to vote, the superior court found that Alaska law specifically permitted CIRI to solicit proxies in response to New Alliance's solicitation and thus granted summary judgment to CIRI on this issue.
As to the second and third claims, New Alliance contended that CIRI's proxies should be voided because the proxy statement and voter guide failed to disclose the names of all candidates running for the board
On the same claim, New Alliance argued that CIRI violated two common law proxy rules — the Equal Prominence Rule and the Buried Facts Rule — by giving Rude less prominence than other directors in CIRI proxy materials. The superior court rejected this argument for two reasons. First, the court noted that "when the legislature enacts a statute to govern a matter previously addressed by the common law, the statute controls," and therefore the proxy regulations discussed above, not common law rules, controlled. Second, the court found that even if the common law rules were applicable, Rude was given the same treatment as other current directors in those parts of the proxy materials applying equally to all directors. And because he was not a continuing director, a board-endorsed candidate, or an "other candidate," he was not included in those sections. The superior court therefore concluded that CIRI did not violate the Equal Prominence Rule or the Buried Facts Rule.
As to the fourth claim, New Alliance argued that the write-in section of CIRI's proxies was insufficient and misleading because it only contained one blank line following the term "Write-In Candidates." The superior court, though, found no legal authority for New Alliance's claim that proxies were required to have multiple write-in slots and further found that CIRI's use of the plural "candidates" would lead a reasonable voter to understand that it was permissible to write in more than one name. The superior court consequently found that CIRI's write-in section complied with Alaska law.
Finally, the superior court concluded that CIRI's proxy was not required to disclose New Alliance's proposal for a special dividend, nor to provide a way for shareholders to vote on it. The superior court concluded that the Alaska Securities Act required CIRI "to include a proposal in its proxy statement when the board intends to introduce a resolution to the shareholders" but that "[t]hird-party proposals which may or may not be introduced at an annual meeting are not required to be in a corporation's proxy and proxy statement." Accordingly, the court concluded that CIRI did not have to include New Alliance's proposal in its proxy materials.
In August 2009, pro tem Superior Court Judge Peter G. Ashman, who had taken the case over from Judge Christen, ordered Rude to file a statement outlining any claims Rude had against CIRI which remained live. When Rude failed to respond, CIRI moved for dismissal, and Rude opposed. The superior court dismissed Rude's counterclaims for failure to comply with the court's August 2009 order. The superior court also found that CIRI was entitled to dismissal "on substantive grounds," noting that Judge Christen's order on partial summary judgment had decided all of Rude's claims relating to CIRI's election procedures and that Rude's remaining claims concerning his demand for shareholders' information were now moot because Rude had been removed as a director.
Rude moved for reconsideration of the dismissal, and the superior court, though noting that Rude had offered no explanation for his failure to respond to the August 2009 order, granted the motion, specifying that it would treat CIRI's motion to dismiss as a motion for summary judgment. The superior court limited briefing to what it found were the only four remaining issues, namely Rude's claims that (1) CIRI unfairly took sides in elections and improperly used its resources to support its candidates; (2) "CIRI's policies and practices are improperly intended to entrench incumbents"; (3) CIRI refused to give Rude shareholder addresses and email addresses, information to which he was entitled as a director; and (4) CIRI refused to give Rude other corporate information to which he was entitled as a director. The superior court gave CIRI an opportunity to supplement its motion as appropriate for summary judgment and for Rude to respond.
In January 2010, after hearing oral argument, Superior Court Judge Frank A. Pfiffner, who had taken over the case from Judge Ashman, issued an oral decision granting CIRI's motion for summary judgment on the remaining counterclaims.
As to the first two issues, that CIRI took sides and their election policies entrench incumbents, the superior court concluded that they had been disposed of by Judge Christen's earlier order on CIRI's cross-motion for partial summary judgment. The superior court determined that once summary judgment was granted in favor of CIRI regarding the specific claims of unfair election practices, the more general claims were unsupported and fell away. As to the second two issues, the superior court concluded that they were moot. The superior court noted that AS 10.06.450(d) did grant directors the right to certain corporate information but found that because Rude's proxies were invalid, he did not win the election and so was not a director.
With regard to a fifth issue, that Rude was entitled to certain corporate information as a shareholder, the superior court rejected this argument for a number of reasons. First, because this issue was outside the scope of the prior order outlining the remaining issues, the court found that Rude had abandoned the claim. Second, the superior court found that Rude had not made any requests in his capacity as a shareholder, but instead only in his capacity as a director. Finally, the superior court determined that even if Rude made requests as a shareholder, any requests did not meet the statutory requirement of shareholder requests for information because the requests did not state "with particularity the purpose of the inspection, identifying that it was a proper purpose and that the documents were connected to an otherwise proper purpose" as required under AS 10.06.430(b). Although the superior court noted that Judge Christen had refused to grant summary judgment as to several of
The superior court ordered Rude to pay $43,773.80 in attorney's fees and $5,441.14 in costs, for a total monetary judgment of $49,214.94.
After filing a notice of appeal, Rude filed a motion for relief from judgment. Rude attached to his motion over 30 new exhibits. CIRI opposed the motion and moved to strike the new exhibits. The superior court granted CIRI's motion to strike the new exhibits, finding that they were irrelevant to the motion, untimely, and unauthenticated. The superior court also denied Rude's motion for relief from judgment, ruling that Rude's motion was not based on a mistake of law or newly discovered evidence as required by Alaska Civil Rule 60(b), but was rather a rehash of his earlier arguments and an attempt to introduce evidence that was unauthenticated and that had been available for timely introduction during the litigation.
Rude has filed two appeals. In the first he appeals many of the substantive matters decided in the superior court's three orders on summary judgment. In the second he challenges four procedural matters: (1) the superior court's award of costs and attorney's fees to CIRI; (2) the superior court's denial of Rude's Rule 60(b) motion for relief from judgment; (3) the superior court's order striking exhibits attached to the 60(b) motion; and (4) the superior court's entry of a stipulation dismissing the New Alliance corporation as a party.
We review grants of summary judgment de novo.
We apply "the deferential `reasonable basis' standard of review ... where a question of law implicates [an] agency's expertise as to complex matters or as to the formulation of fundamental policy."
We will not reverse an award of attorney's fees,
These two appeals encompass a total of 12 primary issues. Rude first brings six claims relating to CIRI's conduct of the election for the board of directors. The next two claims concern CIRI's refusal to turn over to Rude information about CIRI shareholders. Rude then argues that the superior court erred in granting summary judgment on CIRI's claims that the New Alliance proxy materials contained material misrepresentations. In his second appeal, Rude argues that the superior court erred by awarding CIRI attorney's fees. Finally, Rude brings three procedural claims. We address these arguments in turn.
CIRI argues that nearly all of Rude's election claims are moot because, owing to numerous delays in this case, the seats up for election in 2008 have since come up for election again. Consequently, Rude's requested remedy — that CIRI's proxies for the 2008 election be voided — can no longer provide him any relief.
"A claim is moot where ... it has lost its character as a present, live controversy, that is, where a party bringing the action would not be entitled to any relief even if he or she prevailed."
As we have recognized, though, an exception to the mootness doctrine exists through which technically moot claims can be reviewed if there is a strong public interest reason for doing so. In order to determine whether the public interest exception applies, we ask
In Rude's case, because CIRI holds elections every year, his claims are at least capable of repetition. Further, we may assume without deciding that the public interest in open, fully informed corporate democracy is so great as to justify overriding the mootness doctrine. However, in this case the public interest doctrine does not apply because, like in O'Callaghan, "a timely election challenge [was] possible."
The superior court granted summary judgment to CIRI on most of Rude's election counterclaims in May 2009. On July 17, 2009, the superior court held a hearing concerning the issues remaining following Judge Christen's initial summary judgment orders; Rude did not appear at this hearing, nor did he respond to the superior court's order compelling him to identify remaining counterclaims. Accordingly, CIRI filed a motion to dismiss in October 2009. Only then did Rude respond, but the superior court dismissed Rude's remaining claims in November 2009. Rude then filed a motion for reconsideration, and the superior court agreed to convert the motion to dismiss into a motion for summary judgment and give the parties time to brief the matter appropriately. On January 21, 2010, the superior court granted summary judgment on Rude's remaining counterclaims and a final judgment
Nonetheless, we have held that "where the outcome of an otherwise moot claim may `change[] the status of the prevailing party and thus an award of attorneys' fees,' we reach the merits of that claim."
Rude first argues that the superior court erred by determining that CIRI was not obligated to include the names of the New Alliance candidates in its proxy materials. Rude points to two federal cases from outside Alaska for the proposition that corporations bear the obligation to use their proxy materials to inform shareholders of non-board-endorsed candidates that the board knows to be running.
CIRI responds that Alaska law does not require CIRI to list non-board-recommended candidates in its proxy materials. CIRI also
Rude relies primarily on Chambers v. Briggs & Stratton,
As CIRI and the superior court point out, 3 AAC 08.345, which governs the contents of proxy materials, provides:
3 AAC 08.335, which governs the contents of proxies, provides:
The superior court is correct that 3 AAC 08.335, the section governing the proxies themselves, does not require CIRI to include non-board-nominated candidates like Rude in its proxies. Subsection (e)(1) specifically requires that the proxy must "set out the names of the nominees for whom the proxy is solicited." (Emphasis added.) The rule contemplates that each proxy solicitor will only solicit its own proxies, only requiring a solicitor to include its own candidates. Accordingly, CIRI should not be held to an obligation to solicit proxies on behalf of others.
As to 3 AAC 08.345, the section governing the contents of proxy statements, we addressed this exact issue last year and held that corporations are not required to include
Further, as both CIRI and the superior court note, CIRI in fact provided Rude and the other New Alliance candidates an opportunity to be included in the proxy statement, but they chose not to be included. Rude now argues that they should have been included despite this previous refusal. But surely CIRI cannot be required to solicit a candidate's proxies against that candidate's will. The superior court did not err by granting summary judgment to CIRI on this point.
Rude next argues that it was improper for the board to hold "a closed primary election" in which a board-endorsed slate was chosen without shareholder participation. To support his argument he cites to cases concluding that shareholders must be allowed to nominate candidates to oppose board-nominated slates.
Rude next argues that CIRI improperly removed him as a director by "taking him off the list of its current directors" in its statement. This, he argues, violated CIRI's duty to disclose the names of its directors, exceeded CIRI's powers to punish a sitting director, violated common law rules of disclosure and candor, violated common law proxy rules, and amounted to common law fraud.
The superior court correctly granted summary judgment on these claims. The fundamental flaw in Rude's contention is that his name was not removed from CIRI's proxy statement. As discussed above, CIRI was not required to list Rude as a candidate in its proxy statement, and so the omission of his name as a candidate cannot be considered removal.
Rude next argues that the superior court erred when it concluded that "[u]nder
The superior court rejected this argument, relying on 3 AAC 08.345(a). That regulation provides:
The regulation provides an exception to the general rule that a proxy solicitation cannot precede a financial report. Because there was no dispute as to the second and third prongs of the exception, the superior court focused on the first. Rude argued, as he does now, that the first prong was not satisfied because, although it is undisputed that the financial report was not available when CIRI sent out its first proxy mailing, CIRI had all the essential information it needed to compile the report well before its first mailing. The superior court correctly rejected this argument.
CIRI Vice President Barbara Donatelli filed a sworn affidavit stating that the report was not available when CIRI sent out its first mailing. Rude counters that CIRI received its independent auditor's report on March 21, 2008, and therefore had enough time to produce its final report before mailing its first proxy solicitation on approximately April 11. But Rude's bare assertion that CIRI could have completed its financial report within approximately 20 days of the completion of the independent auditor's report does not create a genuine issue of material fact. Summary judgment was therefore properly granted on this point.
Rude next argues that the trial court erred in granting summary judgment on his claim that CIRI was required to disclose the New Alliance proposal for a special dividend and to allow shareholders a way to vote on it. Several interlocking provisions of the Alaska proxy regulations govern whether board proxy materials must provide shareholders with a way to vote on proposals. As a general matter, 3 AAC 08.335(d) provides that proxies can confer authority on proxy holders to vote on proposals only "if the proxy discloses how the shares represented by the proxy will be voted in each case." In some cases, though, proxies may grant proxy holders discretionary authority to vote on certain matters. 3 AAC 08.335(f) provides two potentially relevant circumstances in which discretionary authority may be granted.
First, 3 AAC 08.335(f)(1) allows for proxies to confer on their holders discretionary authority to vote with respect to "matters which the persons making the solicitation do not know, a reasonable time before the solicitation, are to be presented at the meeting." CIRI argues, and the superior court agreed, that this exception applies because "although Rude and the New Alliance had expressed their intention to include the proposal, CIRI could not know whether that plan would indeed be carried out, nor could CIRI know the language that would be used."
Second, 3 AAC 08.335(f)(4) allows for proxies to confer on their holders discretionary
We will focus on the second exception.
When interpreting an agency regulation for which an agency has provided its own interpretation, we apply "a deferential standard of review [that] properly recognizes that the agency is best able to discern its intent in promulgating the regulation at issue."
Rude proposes no alternative interpretation of the regulation except to assert that his interpretation is correct. He makes no argument that the Division's interpretation of the regulation lacks a rational basis. Because an agency is best able to interpret the intent of its regulations,
Finally, in the last of his election-fairness claims, Rude argues the superior court should have invalidated CIRI's proxies because they "did not contain five ... blanks for write-in candidates, but only one." According to Rude, this implied that a voter could only vote for one write-in candidate. As the superior court correctly noted, however, Rude provides no authority
Because the regulations governing proxies do not require spaces for write-in candidates, and because even if such a requirement were inferred, CIRI's use of the plural "candidates" conveys that more than one name may be written in, the superior court correctly granted summary judgment on this point.
Rude's next two claims argue that CIRI improperly denied him access to corporate information to which he was entitled. In the first claim, Rude argues that he was entitled to the information by virtue of his position as a director. In the second, Rude argues that he was entitled to the information by virtue of his position as a shareholder.
Rude argues that he was denied access to two types of corporate information to which he was absolutely entitled as a director. First, he argues that CIRI wrongfully refused to disclose shareholder email addresses and phone numbers. Second, he argues that CIRI wrongfully refused to disclose "information related to the management of the corporation." Rude argues that as a director he had an absolute right to this information under AS 10.06.450(d).
CIRI argues, and the superior court found, that Rude's claim as a director is moot because once he lost his seat as a director he was no longer entitled to this information. Therefore, even if CIRI's denial was improper, Rude no longer has a right to any relief. Rude concedes mootness but argues that the public interest exception applies to his claims. But, in an unpublished decision, we addressed the public interest exception in this context and determined that it does not apply because claims like this would not "continually evade review."
Unlike the other claims at issue in this appeal that are technically moot though nonetheless justiciable, Rude's claim that he was denied corporate information has no bearing on his status as a prevailing party and therefore cannot affect an award of attorney's fees. Rude is seeking to invalidate CIRI's proxies. Whether Rude prevails on this information claim has no bearing on whether CIRI's proxies should have been invalidated, but only on whether Rude was entitled to certain information back when he was a director. The appropriate relief for a denial of corporate information is an injunction,
Rude's second information claim argues that he was denied access to shareholder email addresses to which he was entitled as a shareholder. He argues that AS 10.06.430(b)
Rude has abandoned his shareholder claim for information. Once the superior court had granted summary judgment to CIRI on most of Rude's counterclaims, the superior court gave Rude an opportunity to identify remaining counterclaims. When Rude failed to do so CIRI filed a motion to dismiss the remaining counterclaims. Rude opposed CIRI's motion and identified four remaining counterclaims, none of which concerned shareholders' rights to information. The superior court then converted CIRI's motion to a motion for summary judgment on the four remaining counterclaims exactly as delineated by Rude and gave the parties an opportunity to file briefing. Rude's failure to identify shareholder information requests as a live issue at this point constitutes an abandonment of his claim.
For the foregoing reasons, CIRI is entitled to summary judgment on all of Rude's counterclaims. We now turn to CIRI's original claims that the New Alliance proxy materials contained material misrepresentations.
The superior court determined that five statements or sets of statements in the New Alliance proxy solicitations were materially misleading as a matter of law. Rude responds that four of these sets of statements are true while the fifth is not misleading because it is aspirational. CIRI urges us to affirm the superior court and further argues that the superior court erred by failing to grant CIRI summary judgment on three other allegedly false statements made by New Alliance.
Alaska law prohibits material misrepresentations in proxy solicitations.
The same regulation provides that a "misrepresentation is material if there is substantial likelihood that a reasonable shareholder
Alaska applies the "total mix" standard for determining the materiality of omitted facts.
Although the issue of materiality is generally one of fact, we have held that the issue "may be resolved as a matter of law on summary judgment `if the established [misrepresentations] are so obviously important to an investor, that reasonable minds cannot differ on the question of materiality.'"
The first set of statements the superior court found materially misleading were found in New Alliance's third mailer:
The basis for the superior court's conclusion that these statements, taken together, were misleading was an affidavit filed by CIRI's Director of Land and Resources Kim Cunningham. That affidavit stated, in part:
In granting summary judgment, the superior court found that asking "who is liquidating CIRI" gave the false impression that its assets were being liquidated or sold off. The superior court rejected the defendants' argument that they had a good-faith basis for believing that CIRI was liquidating large landholdings.
On appeal, Rude does not argue that he had a good-faith belief that the New Alliance statements were true, but rather that they are true. Rude argues that "[t]he New Alliance's third mailer did not state or imply that CIRI had sold or liquidated 700,000 acres of surface estate or 1,000,000 acres of subsurface estate, only that CIRI's entitlement to this acreage had been traded away for government surplus property, much of which was sold between 1997 and the present." But taken together, the three paragraphs clearly suggest the former. By titling this section of the mailer "Who is liquidating CIRI?" and claiming that CIRI had disposed of vast estates, New Alliance suggested that major assets are being sold as part of a total dismantling of CIRI. This is an affirmative misrepresentation. It is material because, as the superior court noted, "a reasonable shareholder would of course consider it important when deciding how to vote if he/she understood that 700,000 acres of surface estate and 1,000,000 acres of subsurface estate had been liquidated without explanation."
By mentioning the $336 million in land sales, along with the reductions in CIRI's entitlement, without mentioning that the former was for the sale of only 12,000 acres of surface estate and 119,000 acres of subsurface estate and that the latter was as a result of swapping less valuable (though larger) acreage for more valuable (though smaller) acreage, the mailer suggests that more than half of CIRI's original ANCSA entitlement has been sold. The omission of any explanation as to the sales and land swap is material because "there is `a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the `total mix' of information made available.'"
The superior court also found materially misleading the following statements from New Alliance's third mailer:
Rude argues on appeal that these statements were not misleading because they were "merely aspirational." "The New Alliance," he argues, "is stating that if shareholders elect a majority of New Alliance directors, the directors will consult with shareholders and seek advisory votes on certain large transactions." But the New Alliance materials give the impression that the supposed lack of shareholder participation in CIRI decisions is a violation of Section 2(b) of ANCSA. Rude's after-the-fact explanation — that New Alliance was merely proposing advisory votes — is unpersuasive because New Alliance could easily have said that in the mailer, but chose not to.
Third, the superior court found that it was a material misrepresentation for New Alliance to say on its website that "never again will a hardcore minority of 6 directors control our corporation." The superior court rejected New Alliance's argument that it was referring to the power of six directors to select an executive committee that conducted much of CIRI's business. New Alliance omitted this explanation from the statement on its website. As a result, the total mix of available information suggested improper corporate governance.
These three misrepresentations permeated New Alliance's proxy solicitation and together gave the materially misleading impression that the CIRI board was improperly depriving shareholders of the benefits of corporation ownership. Because these three misrepresentations, taken together, are sufficient to justify the superior court's decision to void the New Alliance proxies, we need go no further. Addressing further alleged misrepresentations can have no bearing on CIRI's status as the prevailing party.
Rude's second appeal in this case challenges the superior court's fee award and three procedural matters. First, Rude argues that the attorney's fee award to CIRI should be reduced to zero based on various alleged forms of misconduct committed by CIRI. Second, Rude argues that the court improperly refused to admit the exhibits that Rude attached to his Rule 60(b) motion. Third, Rude argues that the superior court wrongly denied his Rule 60(b) motion for relief from judgment on procedural grounds and should have reached the substance of his argument. Finally, Rude argues that the court erred in dismissing New Alliance as a party. None of these arguments has merit, and we affirm the superior court on all points.
Following summary judgment on all of CIRI's claims and Rude's counterclaims, the superior court ordered Rude to pay CIRI attorney's fees totaling $43,773.80 and costs totaling $5,441.14.
Alaska Civil Rule 82(b)(2) provides that in cases without money judgments, the superior court "shall award the prevailing party in a case resolved without trial 20 percent of its actual attorney's fees which were necessarily incurred." Here CIRI submitted evidence showing that it had spent $223,530 in litigating the claims and counterclaims against Rude, and the superior court accordingly awarded attorney's fees of slightly below 20%. Rude does not challenge that this was the proper presumptive amount under Rule 82. Instead, he argues that the superior court abused its discretion
Further, with the exception of the claim that CIRI refused to disclose shareholder email addresses, Rude explicitly stated in his opposition to CIRI's motion for attorney's fees that neither party had engaged in vexatious or bad-faith conduct. He has therefore waived this argument.
Rude's second argument, relying on Rule 82(b)(3)(I),
Relying on Rule 82(b)(3)(J), Rude next argues that "[t]his [c]ourt should vacate CIRI's award of costs and attorney fees because
Finally, Rude argues that the superior court should have applied "the equitable doctrine of common benefit" to "protect[] a lone shareholder from bearing the burden of litigation that is intended to benefit many shareholders, to promote corporate suffrage, and to protect the corporate democracy." As discussed above, though, Rude's private interest in bringing his counterclaims was substantial. The superior court was therefore acting within its discretion when it declined to vary the fee award.
Because Rude has not shown that the superior court abused its discretion in declining to vary from Rules 82's presumptive fee awards, we affirm the superior court's fee award.
Rude next argues that the superior court abused its discretion in refusing to admit 33 exhibits attached to his Rule 60(b) motion. Rude's motion for relief from judgment, filed after summary judgment had been granted on all of the claims and counterclaims and after Rude had already filed a notice of appeal, contained 33 new exhibits. CIRI then filed a motion to strike the exhibits on the grounds that they were irrelevant to Rude's Rule 60 motion, that they were filed much too late and were "a blatant attempt to inappropriately supplement the record on appeal," and that they were not authenticated. The superior court granted CIRI's motion for the reasons stated therein.
On appeal, Rude argues that the motion was brought as a Rule 12(f) motion to strike and that Rule 12(f) empowers courts to strike material from pleadings only, and not exhibits. He argues that even if Rule 12(f) were applicable, the exhibits in question "were not redundant, immaterial, impertinent, or scandalous" because they were "CIRI's own business records." He further argues that the superior court erred in finding that the evidence was not relevant under Alaska Evidence Rules 401 and 403. He finally argues that the superior court erred in finding that the exhibits were not admissible because they were not authenticated.
The superior court did not abuse its discretion in refusing to admit the exhibits. As the superior court found, Rude's new exhibits were filed after summary judgment had already been granted on all claims and those judgments had already been appealed. At that point, Rude's delay in filing the exhibits could fairly be called undue, and admitting the exhibits — i.e., giving Rude an opportunity to supplement the appellate record after the case had already terminated — would have unfairly prejudiced CIRI.
Rude next argues that the superior court abused its discretion in denying his Rule 60(b) motion for relief from judgment.
Finally, Rude argues that the superior court erred by entering a stipulated order dismissing New Alliance as a party. On July 6, 2009, following the superior court's two main summary judgment rulings, the superior court entered a stipulation and order dismissing defendants Anagick, Kiana, Thomas, and New Alliance as parties. The stipulation was signed by CIRI's attorney, Thomas's attorney, Chris Kiana, and Ella Anagick, who four days before had filed an entry of appearance as attorney on behalf of New Alliance.
Rude argues that this stipulation was "not effective" with respect to New Alliance because Triem was the attorney of record for New Alliance, and he "has never withdrawn or been substituted." Alaska Civil Rule 81(c), on which Rude relies, provides:
According to Rude, this rule required a substitution of counsel before Anagick could act on behalf of New Alliance.
CIRI responds that neither Rude nor Triem objected to the dismissal below, nor to Anagick's entry of appearance as counsel for New Alliance, and that this point is therefore waived. CIRI is correct. "A party may not raise an issue for the first time on appeal."
For the foregoing reasons, we AFFIRM the superior court.
