Huna Totem Corp. doesn't have to dissolve a multi-million-dollar trust or let shareholders vote to do so, a judge ruled today in Juneau.
Superior Court Judge Patricia Collins said this morning that the corporation's board of directors did not intentionally mislead shareholders or misrepresent the facts about a review that would take place five years after the trust began in 1995. During the review the trust could be changed or ended.
"The information was there," said Bruce Gagnon, attorney for the trust, after Collins gave her oral decision. "The corporation had adequately presented the trust for the shareholders' vote."
The trust, which Collins said had about $35 million in it in 2000, is for the 1,191 shareholders of Huna Totem, the for-profit Native corporation for Hoonah.
Plaintiffs said documents and oral communications from Huna Totem, when shareholders were considering whether to establish the trust in 1994, led them to believe they would be able to vote to change or end the trust in the five-year review. They said that influenced their vote.
In 1999 some shareholders wanted to end the trust and take the value of their shares in a lump sum. A typical shareholder with 100 shares would get $35,000, they said.
The defense said the review process, as spelled out in the proxy statement and trust agreement, was that trustees would recommend whether to change or end the trust, and shareholders would vote only on that recommendation.
That's what happened in March 2000, when a majority of shareholders voted to approve the recommended payout of $50 a share from the trust's principal.
Collins said some informational pamphlets, given to shareholders before the 1994 vote to establish the trust, didn't include all the details. But she said shareholders had the opportunity to read the trust agreement.
And she said no evidence was presented in the trial this week that shareholders who believed they were misled had asked Huna Totem for details of how the five-year review would work.
"I find that unscrambling the trust now would be, in short, unjust and inequitable," Collins said.
The trust, which paid out $20 million in equity and earnings between its inception in 1995 and 2000, has considerable support from shareholders, she said.
Collins also said she wouldn't order Huna Totem to hold another vote about whether the trust should be changed or ended. If the plaintiffs had asked the court before the March 2000 vote, there might have been a "somewhat different" ballot, Collins said.
But, the judge said, "I can't undo the results of that vote, or the fact that funds already have been distributed. It becomes problematic to contemplate what such a new vote would look like and how many questions would have to be included in that review."
The plaintiffs will decide whether to appeal the case, said co-plaintiff Alf Skaflestad.
The lawsuit was a class action, which by definition included all shareholders. Skaflestad said perhaps 300 shareholders supported the lawsuit, but that the required two-thirds of shareholders would have voted to end the trust if they had that option in 2000.
"My regret is that the court overlooked a simple option for a curative ballot," said Fred Triem, the plaintiff's attorney.
A ballot to cure the plaintiffs complaint would give shareholders the option of leaving the trust alone, distributing part of the money, or ending it and giving out all of the money, he said.
* * * * *
Empire reporter Eric Fry can be reached at email@example.com.