Demmert v. Kootznoowoo, Inc.

Appellants brought suit to challenge several aspects of Kootznoowoo’s longshoring program, as well as the corporation’s partial payment of longshore workers’ travel costs. The superior court found for Kootznoowoo, upholding both its participation in the joint venture longshoring program and its practice of paying longshore workers’ travel costs.A. Neither Kootznoowoo’s Distribution of Longshoring Employment Opportunities nor the Corporation’s Payment of Longshore Workers’ Travel Costs Constituted Discriminatory Distribution of Corporate Wealth or Dividends.Appellants contest Kootznoowoo’s distribution of longshoring opportunities as well as its payment of “travel subsidies” for longshore workers. They argue that by paying for longshore workers’ transportation and lodging, Kootznoowoo is distributing corporate wealth in a manner that discriminates among its shareholders. Appellants also argue that because the corporation only subsidizes travel to and from Angoon, it excludes shareholders outside of Angoon from its pool of qualified workers. They claim that the opportunity to work as a longshore worker and the payment of travel subsidies constitute a form of wealth “not available to the 63.1% of Kootznoowoo’s shareholders who reside elsewhere.” Thus Kootznoowoo’s operation of its longshoring program treats corporate shares in a discriminatory manner, violating the corporation’s contract with its shareholders, as well as the Equal Treatment Rule codified in AS 10.06.305 -.308, and -.313,[3] applicable to the Alaska Native Village Corporation through the Alaska Native Claims Settlement Act §§ 7(h)(1)(A) and 8(c).[4]

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Reinforces board discretion and the legal boundaries around dividends and distributions�often a flashpoint in shareholder trust.