United States v. 2012-08-20 | 11-35252 | COOK INLET REGION, INC. V. ROBERT RUDE | precedential |…

FOR PUBLICATION
UNITED STATES COURT OF APPEALS
FOR THE NINTH CIRCUIT
 COOK INLET REGION, INC.,
Plaintiff-Appellee, No. 11-35252
v. D.C. No.
 3:09-cv-00256-RRBROBERT W. RUDE; HAROLD
RUDOLPH, OPINION
Defendants-Appellants. 
Appeal from the United States District Court
for the District of Alaska
Ralph R. Beistline, Chief District Judge, Presiding
Argued and Submitted
June 25, 2012—Anchorage, Alaska
Filed August 20, 2012
Before: Alfred T. Goodwin, William A. Fletcher, and
Milan D. Smith, Jr., Circuit Judges.
Opinion by Judge William A. Fletcher
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COUNSEL
Frederick William Triem, Law Offices of Fred W. Triem,
Petersburg, Alaska, for the appellants.
Jahna M. Lindemuth, Dorsey & Whitney LLP, Anchorage,
Alaska, William D. Temko, Munger, Tolles & Olson LLP,
Los Angeles, California, for the appellee.
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OPINION
W. FLETCHER, Circuit Judge:
Plaintiff-Appellee Cook Inlet Region, Inc. (“CIRI”) is an
Alaska Native Regional Corporation formed under the Alaska
Native Claims Settlement Act (“ANCSA”). Defendants-
Appellants Robert W. Rude and Harold F. Rudolph are share-
holders of CIRI and former members of CIRI’s Board of
Directors.
In 2009, Plaintiff CIRI filed suit against Defendants, alleg-
ing that they had violated ANCSA and Alaska law. The dis-
trict court held that it had federal question jurisdiction over
the ANCSA claims and supplemental jurisdiction over the
state-law claims. On appeal, Defendants challenge the court’s
holding that it had subject matter jurisdiction over the
ANCSA claims. We affirm the district court.
I. Background
Congress enacted ANCSA in 1971, two years after the dis-
covery of oil in Prudhoe Bay. Alaska Native Claims Settle-
ment Act, Pub. Law No. 92-203, 8 Stat. 688 (1971) (codified
as amended at 43 U.S.C. §§ 1601-1629h); see also Martha
Hirschfield, Note, The Alaska Native Claims Settlement Act:
Tribal Sovereignty and the Corporate Form, 101 Yale L.J.
1331, 1335-36 (1992) (“Oil companies eager to exploit Alas-
ka’s natural resources were unwilling to begin development
until title to the land had been quieted.”). Under ANCSA, all
Native claims to Alaskan land based on aboriginal use and
occupancy were extinguished, and Native Alaskans were
granted monetary compensation and title to forty million acres
of land. See John F. Walsh, Note, Settling the Alaska Native
Claims Settlement Act, 38 Stan. L. Rev. 227, 227 (1985).
ANCSA transferred title of the settlement land to twelve
regional corporations and numerous village corporations cre-
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ated by the Act. 43 U.S.C. §§ 1606-07. Under ANCSA, only
Native Alaskans could be shareholders in these corporations
for the first twenty years of their existence. This restriction on
alienation was designed to ensure that Native Alaskan lands
would not be sold at low prices as soon as title cleared.
§ 1606(h)(1) (1982); see also Walsh, 38 Stan. L. Rev. at 232-
33 (discussing reasons for alienability restriction).
In 1990 and 1991, as the twenty-year restriction neared its
end, Congress amended ANCSA to broaden restrictions on
the transfer of corporate stock. See Little Bighorn Battlefield
National Monument, Pub. L. No. 102-201, § 301, 105 Stat.
1631, 1633 (1991); Alaska Native Claims Settlement Act,
Amendment, Pub. L. No. 101-378, § 301, 104 Stat. 468, 471-
72 (1990). Under current law, shareholders in regional corpo-
rations established under ANCSA cannot sell or otherwise
transfer their stock except under limited circumstances. 43
U.S.C. § 1606(h)(1)(B)-(C).
Lifting ANCSA’s alienability restrictions on stock requires
an amendment to the regional corporation’s articles of incor-
poration. See § 1629c(b). ANCSA provides two mechanisms
by which these restrictions can be lifted. One of them is a
shareholder vote taken at the request of a shareholder petition.
§ 1629c(b)(I)(B)(ii).
In 2009, Defendants solicited shareholder signatures for
two petitions. The first petition sought a vote to lift the alien-
ability restrictions. The second petition sought to convene a
special shareholder meeting to consider six advisory resolu-
tions concerning dividends, elections, financial reporting, vot-
ing rights, and compensation of senior management. The
petitions suggested that Plaintiff’s board of directors and
senior management were mismanaging the corporation.
Defendants sent four mailers soliciting signatures for the peti-
tions.
Plaintiff filed suit, alleging two claims under ANCSA and
two claims under Alaska law. Plaintiff moved for summary
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judgment on all claims. Defendants did not oppose the
motion. The district court granted summary judgment to
Plaintiff on all claims. Defendants filed a motion for relief
from judgment, arguing that the court lacked federal-question
subject matter jurisdiction. They also argued that the court
erred in granting summary judgment on the second of Plain-
tiff’s two ANCSA claims. The district court concluded that it
had subject matter jurisdiction. However, it changed its mind
on the merits of the second of the two ANCSA claims and
ruled against Plaintiff on this claim.
After entry of final judgment, Defendants appealed, chal-
lenging only the jurisdictional ruling.
II. Jurisdiction and Standard of Review
We have appellate jurisdiction under 28 U.S.C. § 1291. We
review de novo district court determinations of subject matter
jurisdiction. Puri v. Gonzales, 464 F.3d 1038, 1040 (9th Cir.
2006).
III. Discussion
Plaintiff alleged two claims under ANCSA. The first claim
alleged that defendants violated 43 U.S.C. § 1629b(c). This
section permits the holders of 25 percent of the voting power
of a Native corporation to petition the board of directors to lift
alienability restrictions. The section provides that Alaska law
governing the solicitation of proxies “shall govern solicitation
of signatures for a petition,” with exceptions not applicable
here. § 1629b(c)(1)(B). Plaintiff alleged that defendants’
solicitation materials for the petitions contained false and
materially misleading statements, in violation of Alaska law
that has been incorporated into § 1629b(c). See Alaska Stat.
§ 45.55.160.
The second claim alleged that defendants violated 43
U.S.C. §§ 1629b(b)(2)(A) and 1629c(b)(2). These sections
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require that certain information be disclosed in petitions to lift
alienability restrictions. These sections do not incorporate any
Alaska law.
[1] The general federal question jurisdiction statute, 28
U.S.C. § 1331, grants federal district courts “original jurisdic-
tion of all civil actions arising under the Constitution, laws,
or treaties of the United States.” “A case arise[es] under fed-
eral law within the meaning of § 1331 . . . if a well-pleaded
complaint establishes either that federal law creates the cause
of action or that the plaintiff’s right to relief necessarily
depends on resolution of a substantial question of federal
law.” Empire Healthchoice Assurance, Inc. v. McVeigh, 547
U.S. 677, 689-90 (2006) (internal quotation marks omitted).
We conclude that the district court had federal question sub-
ject matter jurisdiction over Plaintiff’s two ANCSA claims
because “federal law creates the cause of action” in both
claims. Id. at 690.
Defendants make four arguments why there is no federal
question jurisdiction over Plaintiff’s first claim. First, they
argue that Plaintiff’s claim under § 1629b(c)(1)(B) “does not
allege any serious dispute over the validity, construction or
effect[ ] of the ‘federalized’ state law . . . that requires the
experience and uniformity” of a federal forum. Second, they
argue that federal question jurisdiction over the first claim
would disrupt the proper federal-state balance. Third, they
argue that the claim does not raise a substantial federal ques-
tion. Fourth, they argue that Congress’ failure to create an
explicit cause of action to challenge the solicitation of signa-
tures indicates that it did not intend to grant federal jurisdic-
tion over claims arising under the provision.
[2] Defendants’ first and second arguments conflate the
sometimes difficult jurisdictional question posed when federal
law is embedded in a state-law claim with the much more
straightforward question posed when state law is embedded in
a federal-law claim. There is federal question jurisdiction over
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a state-law claim only if it “necessarily raise[s] a stated fed-
eral issue, actually disputed and substantial, which a federal
forum may entertain without disturbing any congressionally
approved balance of federal and state judicial responsibili-
ties.” Grable & Sons Metal Prods., Inc. v. Darue Eng’g &
Mfg., 545 U.S. 308, 314 (2005). By contrast, there is federal
question jurisdiction over a federal-law claim simply by virtue
of its being a claim brought under federal law, whether or not
it incorporates state law.
[3] Plaintiff’s first claim required the district court to apply
Alaska law governing proxy solicitations to determine the
legality of Defendants’ shareholder petitions under ANCSA.
But Plaintiff’s claim was not brought as a state-law claim.
Rather, Plaintiff brought a federal law claim under a provision
of ANCSA that incorporated state law. Plaintiff did not bring,
and indeed could not have brought, a claim directly under
Alaska law because the relevant provision of Alaska law gov-
erns proxy solicitations rather than shareholder petitions. See
Alaska Stat. § 45.55.160 (prohibiting “untrue statement[s] of
material fact” in documents filed under proceedings in Chap-
ter 55 of the Alaska Securities Act).
Defendants’ third and fourth arguments are essentially the
same as their argument that there is no federal question juris-
diction over Plaintiff’s second claim. That argument is that
both ANCSA claims fail on the merits, and that there is there-
fore no federal question jurisdiction over them.
[4] Defendants’ argument fails because there is subject
matter jurisdiction over federal-law claims unless they are
“obviously frivolous.” Sea-Land Serv., Inc. v. Lozen Int’l,
LLC, 285 F.3d 808, 814 (9th Cir. 2002) (internal quotation
marks omitted). It is hard to show frivolousness. There is fed-
eral question jurisdiction unless the federal claim is “so insub-
stantial, implausible, foreclosed by prior decisions of [the
Supreme] Court, or otherwise completely devoid of merit as
not to involve a federal controversy.” Steel Co. v. Citizens for
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a Better Env’t, 523 U.S. 83, 98 (1988) (internal quotations
omitted). “Any non-frivolous assertion of a federal claim suf-
fices to establish federal question jurisdiction, even if that
claim is later dismissed on the merits.” Cement Masons
Health & Welfare Trust Fund for N. Cal. v. Stone, 197 F.3d
1003, 1008 (9th Cir. 1999).
[5] Neither of Plaintiff’s ANCSA claims was frivolous.
Defendants can hardly contend that Plaintiff’s first claim was
frivolous, given that the district court found Defendants liable
on that claim. The district court eventually concluded that
Plaintiff’s second claim failed on the merits, but that claim
was not “insubstantial” or “implausible.”
[6] Defendants make a final argument, applicable to both
ANCSA claims. They contend that ANCSA itself limits fed-
eral jurisdiction over claims brought under it. Section 1601(f)
states that “no provision of this chapter shall be construed to
constitute a jurisdictional act, to confer jurisdiction to sue, nor
grant implied consent to Natives to sue the United States or
any of its officers with respect to the claims extinguished by
the operation of the chapter.” 43 U.S.C. § 1601(f). Defendants
have misread this section. It limits litigation challenging the
elimination of Native Alaskan land claims under ANCSA, but
it does not limit § 1331 federal question jurisdiction over
other claims brought under ANCSA.
Conclusion
[7] We hold that there is federal question jurisdiction under
§ 1331 over Plaintiff’s ANCSA claims.
AFFIRMED. .
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