Pederson v. Arctic Slope Reg'l Corp., S-17840

CourtSupreme Court of Alaska (US)
Writing for the CourtCARNEY, JUSTICE
Docket NumberS-17840
Decision Date23 September 2022



No. S-17840

Supreme Court of Alaska

September 23, 2022

Appeal from the Superior Court of the State of Alaska, Superior Court No. 3AN-09-10971 CI Third Judicial District, Anchorage, William F. Morse, Judge.

Rodney S. Pederson, pro se, Anchorage, Appellant.

James E. Torgerson, Stoel Rives LLP, Anchorage, and C. Robert Boldt and Michael Shipley, Kirkland & Ellis LLP, Los Angeles, for Appellees.

Before: Winfree, Chief Justice, Maassen, Carney, Borghesan, and Henderson, Justices.




A corporate shareholder alleged the corporation violated his statutory right to inspect certain records and documents. The superior court found that the shareholder did not assert a proper purpose in his request. The shareholder appeals, arguing the superior court erred by finding his inspection request stated an improper purpose,


sanctioning him for failing to appear for his deposition, and violating his rights to due process and equal protection by being biased against him. We reverse the superior court's order finding that the shareholder did not have a proper purpose when he requested the information at issue from the corporation. But we affirm the superior court's discovery sanctions.


A. Facts

This appeal arises out of a longstanding dispute[1] between Rodney Pederson and the Arctic Slope Regional Corporation (ASRC).[2] Pederson is an original shareholder of ASRC, possessing 100 Class A shares.[3] He was employed as in-house counsel to ASRC, and later as an executive for one of its subsidiaries, until the employment relationship soured.[4] Pederson has since sued ASRC and sought election to its board.[5]

In June 2009 Pederson sent a letter seeking to exercise his shareholder right


to inspect ASRC's "books, records of account and minutes" under AS 10.06.430(b).[6] The letter enclosed three separate requests for information relating to (1) an alleged purchase of a minority interest in an ASRC subsidiary and potential transfers of that interest to executives, (2) the executive retirement plan, and (3) the process for setting executive compensation. In the letter Pederson explained that his goal was to use the information to create "an educational website recommending needed updates to the ASRC articles and/or bylaws." Pederson stressed that he wanted to "ensure any information included is true and accurate, and not false or misleading."

Pederson also accused some executives of putting their own interests before shareholders. He described his belief that officer and executive compensation should be reviewed by shareholders "in light of recent dramatic increases in officer and executive compensation packages, and in my opinion, the transfer of corporate assets to executives .... Someone has to step-up [sic] and do something to . . . place[] limits on management's ability to enrich themselves ... at the expense of the Shareholders." Tying his concerns to the requested information, he wrote:

Regarding the request for information on officer and executive compensation, what I am interested in is the influence that management Board members have in approving their own compensation, if any, and the Presidents' ability to determine or influence the compensation of fellow management Board members who elect them, if any. Again, I certainly do not want to mischaracterize the process or mislead the Shareholders about the ... topics, nor do I want to make statements that are not true and accurate
In addition to the generalized statement of purpose in his letter, Pederson

included individualized statements of purpose for each request for information.[7] First, Pederson sought information relating to the alleged transfer of ASRC subsidiary shares to its executives for the purpose of soliciting shareholder signatures to amend ASRC's procedures surrounding executive compensation. Second, Pederson sought information relating to the executive retirement plan to solicit shareholder signatures to amend bylaws to prevent board members from also serving as compensated corporate officers. Third, Pederson sought information relating to executive compensation for the past five fiscal years for the same purpose as his second request.

After a few rounds of informal negotiation, Pederson and ASRC could not agree on the scope of Pederson's inspection right and whether ASRC could demand a confidentiality agreement. Unsatisfied with ASRC's partial disclosures, Pederson filed suit under AS 10.06.430(c), which provides a cause of action for an alleged violation of a shareholder's right to inspection.[8]

B. Proceedings

Pederson's complaint alleged that ASRC had denied his shareholder inspection rights by refusing to comply with his written demand stating a proper purpose. He sought a money judgment for statutory and punitive damages along with an order compelling production of the materials he requested. ASRC denied any wrongdoing


under AS 10.06.430(b) and denied that Pederson had cited a proper purpose in his requests.

When both parties moved for summary judgment in February and March of 2010, however, ASRC stipulated that "[f]or purposes of summary judgment cross-motions, ASRC does not dispute that, in his correspondence, Pederson stated legally proper purposes for his requests." Thus, the issue on summary judgment, and later at trial, was whether ASRC's partial disclosures complied with its statutory obligation to disclose "books and records of account, minutes, and record of shareholders."[9]Following a bench trial the superior court found that ASRC had supplied Pederson with all of the information to which he was entitled under AS 10.06.430. Pederson appealed.

We reversed.[10] Relevant to this appeal, we held that a shareholder's right to inspect "books and records of account" includes, among other things, records of individual executive compensation and transfers of corporate assets or interests to executives.[11] We also noted that while ASRC had not disputed Pederson's proper purpose on appeal, regulations[12] governing the administration of Alaska Native corporations may "provide him with an additional proper purpose for inspection not


available in the same way to shareholders of other corporations."[13] We remanded the matter to the superior court for further proceedings consistent with our decision.[14]

On remand Pederson argued that he was entitled to a judgment that ASRC had not complied with AS 10.06.430. The superior court denied his motion and allowed ASRC to provide additional documents as specified in Pederson I. Pederson filed several additional summary judgment motions again arguing that ASRC was liable to him as provided by AS 10.06.430(c) for its initial denial of his request for information. The superior court denied the motions, reasoning that Pederson I announced new law and therefore ASRC had not violated Pederson's inspection rights at the time it denied his request. Pederson petitioned for our review. We summarily reversed the superior court on the narrow ground that the Pederson I "decision reflected] the existing and applicable law [at the time of his request]. The superior court [was] directed to reevaluate Pederson's summary judgment motion(s) with the correct legal framework in mind."[15]

On second remand, the superior court initially indicated that it was "looking very seriously at granting [Pederson's motion for] summary judgment, based on the Supreme Court." But the court ultimately permitted ASRC to argue for the first time that Pederson did not have a proper purpose for requesting the information. Pederson filed another motion for summary judgment contesting the superior court's order reopening the proper purpose issue. The superior court treated it as a motion for reconsideration and denied it. Later, the superior court issued an order that (1) ASRC had not waived


its proper purpose defense; (2) the shareholder has the burden of proving a proper purpose; and (3) the proper purpose defense is not an affirmative one. The court then ordered discovery on the issue of proper purpose. In January 2019 the court sanctioned Pederson for failing to appear for his deposition.

At his rescheduled deposition the next month, Pederson made several statements that ASRC claimed demonstrated that he had an ulterior, unstated, and improper purpose. Pederson said that his stated purpose was not "the only purpose" and that he also wanted to know if there was "compensation [to the executives] that wasn't reported to the shareholders." When asked why he did not state that purpose, he responded, "I wouldn't say that I hid it. I think it was pretty obvious." He went on to say that he wanted "true and accurate information on the compensation records."

The superior court held an evidentiary hearing following the deposition. Pederson provided an affidavit in which he reiterated that his true purpose was to compare executive compensation disclosures with "true and accurate records" of executive compensation. On cross-examination he explained that he thought this purpose was "implicit in the demand."

In July 2020 the superior court issued findings of fact regarding proper purpose. The superior court stated it understood Pederson's purpose to be the one he had most recently advocated at the evidentiary hearing: "[t]o obtain true and accurate information and records." The court concluded that "[t]o merely state that [Pederson] wants accurate information is not sufficient." The court also...

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