Pederson v. Arctic Slope Regional Corp.
331 P.3d 384
| Alaska | 2014Background
- Rodney S. Pederson, an Arctic Slope Regional Corporation shareholder, demanded inspection under AS 10.06.430 of books and records of account and minutes relating to executive compensation and alleged transfers of subsidiary equity to executives.
- The Corporation insisted on a confidentiality agreement before producing responsive materials; Pederson negotiated but ultimately refused to sign the drafts offered.
- The Corporation produced annual reports, proxy statements, and typed meeting minutes (summaries of topics and actions) but withheld electronic accounting records, detailed transaction ledgers, individual compensation data, and presentations/reports made to the board.
- Pederson sued, claiming the Corporation unlawfully withheld inspectable records and improperly conditioned production on a confidentiality agreement. The parties stipulated Pederson had a proper purpose; the remaining disputes were scope of inspectable materials and permissibility/reasonableness of confidentiality conditions.
- The superior court held (1) electronic accounting records were not within "books and records of account," (2) annual reports/proxies satisfied production, (3) minutes need only be concise post-meeting summaries, and (4) the Corporation could require a reasonable confidentiality agreement (and its proffer was reasonable). Pederson appealed.
- The Alaska Supreme Court reversed in part, holding electronic records are within "books and records of account," that the category extends beyond annual reports/proxies (including ledgers, monthly statements, records of receipts/disbursements, and individual executive compensation/asset transfers), affirmed the limited meaning of "minutes," and held the Corporation’s confidentiality drafts were unreasonably broad.
Issues
| Issue | Pederson's Argument | Arctic Slope's Argument | Held |
|---|---|---|---|
| Scope of "books and records of account" — does it include electronic records and detailed accounting data? | Includes all financial books/records, including electronic ledgers, monthly statements, check registers, individual exec compensation, and transfer records. | Narrow: corporation maintains records only electronically and production can be satisfied by annual reports and proxy statements (practical/volume concerns). | "Books and records of account" includes electronic records and extends beyond annual reports/proxies to monthly statements, ledgers, receipts/disbursements, and individual exec compensation/transfer records. |
| Whether annual reports/proxy statements suffice in lieu of underlying accounting records | Annual reports/proxies are insufficient substitutes for inspectable accounting records. | Annual reports/proxies (already produced to shareholders) satisfy statutory obligation, especially where electronic records are voluminous. | Annual reports/proxies are not an adequate substitute; statute contemplates broader inspectable records. |
| Meaning of "minutes" — do minutes include presentations/reports made to the board? | Minutes should include documents in the minute book, including contracts, reports, and materials used to reach decisions. | Minutes mean the written record of proceedings — post-meeting concise summaries not including presentations/handouts. | "Minutes" require faithful records of subjects addressed and actions taken; do not ordinarily include presentations or reports made to the board (though attachments incorporated into minutes may be inspectable). |
| May a corporation condition production on a confidentiality agreement and what limits apply? | Corporation may not condition statutory inspection on a unilateral confidentiality agreement; proper-purpose requirement and court orders are the sole tools. | Corporation may demand a confidentiality agreement to protect trade secrets/confidential info and avoid harassment. | A corporation may request a confidentiality agreement, but it must (1) reasonably define what is confidential and (2) not impose unreasonably restrictive terms; the Corp.'s drafts were unreasonably broad (e.g., sweeping definition of "Confidential Information" and onerous third-party restriction/indemnity). |
Key Cases Cited
- Dan v. Dan, 288 P.3d 480 (Alaska 2012) (standard of review and de novo legal analysis in Alaska appellate review)
- Guthrie v. Harkness, 199 U.S. 148 (U.S. 1905) (recognizing common-law shareholder inspection right for proper purposes)
- Pershing Square, L.P. v. Ceridian Corp., 923 A.2d 810 (Del. Ch. 2007) (courts may condition inspection remedies on reasonable confidentiality protections)
- Disney v. Walt Disney Co., 857 A.2d 444 (Del. Ch. 2004) (discussion of confidentiality expectations for internal communications and scope of protective orders)
- Moore v. Rock Creek Oil Corp., 59 S.W.2d 815 (Tex. Comm’n App. 1933) (a corporation may not defeat a statutory inspection right by offering audited financial statements as a substitute for inspection)