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Rude v. Cook Inlet Region, Inc.

Supreme Court of Alaska

April 11, 2014

ROBERT W. RUDE, HAROLD F. RUDOLPH, and BRENDA NICOLI, Appellants/Cross-Appellees,
v.
COOK INLET REGION, INC., Appellee/Cross-Appellant

Page 854

Appeal from the Superior Court of the State of Alaska, Third Judicial District, Anchorage, William F. Morse, Judge. Superior Court No. 3AN-10-09493 CI.

Fred W. Triem, Petersburg, for Appellants/Cross-Appellees.

Jahna M. Lindemuth and Katherine E. Demarest, Dorsey & Whitney LLP, Anchorage, and William D. Temko, Munger, Tolles & Olson LLP, Los Angeles, California, for Appellee/Cross-Appellant.

Before: Fabe, Chief Justice, Winfree, Stowers, and Bolger, Justices. [Maassen, Justice, not participating].

OPINION

Page 855

BOLGER, Justice.

I. INTRODUCTION

Robert Rude and Harold Rudolph are shareholders and former directors of Cook Inlet Region, Inc. (CIRI). They distributed a joint proxy solicitation in an attempt to be elected to the CIRI board of directors at CIRI's 2010 annual meeting. Rude and Rudolph accumulated over one quarter of the total outstanding votes, but CIRI's Inspector of Election refused to allow them to cumulate their votes. Thus, their votes were split evenly between the two of them and neither was seated. We conclude that the language of this proxy form required the shareholders' votes to be equally distributed between Rude and Rudolph unless a shareholder indicated otherwise. We therefore affirm the superior court's decision granting summary judgment in favor of CIRI on this issue.

CIRI cross-appeals, arguing that the superior court should have awarded attorney's fees under Alaska Civil Rule 68, as well as sanctions against plaintiffs' counsel under Alaska Civil Rule 11. We conclude that the superior court was not required to order sanctions, but we remand for reconsideration of the attorney's fee award.

II. FACTS AND PROCEEDINGS

CIRI is an organization created under the Alaska Native Claims Settlement Act (ANCSA). CIRI is governed by a 15-member board of directors, with the directors serving staggered three-year terms; five directors are elected every June at the annual meeting. Since 1997, CIRI has rotated its annual meeting between three locations: Anchorage, Kenai, and Puyallup, Washington. The 2010 annual meeting was held in Puyallup. For each election, the board chooses a slate of five recommended candidates for whom it solicits proxies. Rude and Rudolph are CIRI shareholders and former directors. In 2010, neither Rude nor Rudolph was an incumbent director; they distributed a joint proxy statement calling themselves the " R& R Alliance" (R& R).

CIRI's 2010 election was coordinated and supervised by an Inspector of Election. On June 3, 2010, two days before the June 5 annual meeting, CIRI sent a letter to the Inspector, urging him to find that the R& R proxy did not give Rude and Rudolph authority to cumulate the votes they received. Rudolph responded by sending his own letter to the Inspector. In it, he withdrew his candidacy and asked that he and Rude be allowed to cumulate all of the R& R proxy votes, which amounted to 27% of the total, in Rude's favor. The Inspector split the R& R votes evenly between Rude and Rudolph, and as a result neither was elected to the board.

Rude, Rudolph, and Brenda Nicoli, on behalf of herself as well as a putative class of CIRI shareholders,[1] filed claims against CIRI challenging, among other things, the result and fairness of the 2010 board election. They sought monetary damages as well as equitable relief. CIRI moved for summary judgment on all claims, which the superior court granted. The Shareholders now appeal the grant of summary judgment as to their election claims.

Page 856

There is also some relevant prior history between these parties. CIRI sued Rude and others in Alaska Superior Court in 2008. There, Rude and his co-defendants raised several counterclaims that were similar to some of the claims they raise in this case. The superior court granted summary ...


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