Opinion ID: 2629723
Heading Depth: 5
Heading Rank: 3

Heading: NANA has a direct pecuniary interest in the outcome of this lawsuit.

Text: Reich argues that because NANA is not a party to the litigation, the financial interest of its shareholders is only indirect. The superior court found that [t]he evidence in this case demonstrates that NANA and Cominco have a joint venture agreement concerning the operation of the Red Dog Mine, and that the contractual process of division of costs and profits [creates] a potential for shareholders to compromise their verdicts in this case. A company's direct financial interest in the outcome of litigation is imputed to its shareholders. [20] NANA and Cominco have an operating agreement specifying their financial relationship. In determining whether NANA had a financial interest in Reich's lawsuit, the superior court relied on the affidavit and testimony of Shelby Stastny, NANA's Chief Financial Officer. Stastny explained the Development and Operating Agreement between NANA and Cominco. Stastny asserted that any damages awarded against Cominco will affect Cominco's operating costs and, in turn, the net profits for the Red Dog Project. Accordingly, NANA has a direct pecuniary interest in the outcome of the ... litigation. NANA receives a net smelter royalty for the minerals extracted from the Red Dog Mine. After Cominco recovers operating costs relating to the mine, NANA receives a portion of each year's net profits. The percentage of the net profits that NANA receives increases annually. NANA will ultimately receive fifty percent of the annual net profits. Cominco may subtract operating costs from gross profits before it calculates NANA's revenue. Legal expenses associated with the mine are included in those deductible operating costs so long as a jury does not find Cominco liable for gross negligence or willful misconduct. Cominco may therefore subtract any costs of defending a lawsuit in which a jury finds that Cominco was not at fault or was simply negligent. Cominco may also deduct a judgment if it is based on fault less serious than gross negligence. These deductions decrease NANA's net profits. A verdict of no liability will reduce NANA's profits, as will a verdict of liability based on simple negligence. The agreement between Cominco and NANA therefore potentially gives NANA shareholders an incentive to find Cominco liable for gross negligence or willful misconduct. Finding otherwise will reduce NANA's profits and could affect its dividends. The superior court concluded that NANA is financially tied to Cominco and the operation of the Red Dog Mine, and that NANA has a pecuniary interest in the outcome of this litigation. The superior court ruled that this financial interest justified the challenge for cause of NANA's shareholders. Reich relies on Harmotta v. Bender. [21] The challenged jurors were members of the Roman Catholic Church and were to hear a case involving a Roman Catholic parish in the same diocese. [22] They were challenged because they were members of the Diocese fund church activities, and could be called upon to reimburse the church if the appellants recovered a judgment against the church. [23] The trial court ruled that they were not subject to challenge because their interest was too remote; the appellate court held that this ruling was not an abuse of discretion. [24] To some extent, Harmotta simply reflects the deference given to a trial court when it decides whether to exclude challenged jurors in circumstances permitting an exercise of discretion. But here, once the trial court found that NANA had a pecuniary interest in the outcome of this litigation, the per se rule of exclusion applied to NANA shareholders, and the trial court no longer had discretion to permit NANA shareholders to sit as jurors. In Harmotta there was only a possibility church members would be called on to reimburse the church. In this case, Reich's lawsuit would reduce NANA's profits unless the jury found willful misconduct or gross negligence. Jurors who are NANA stockholders therefore had incentive to find Cominco liable for either willful conduct or gross negligence, and had incentive not to find it free of fault. Other reported decisions preclude stockholders from sitting on juries in cases in which their company might have any financial interest at all, regardless of the amount of interest or whether the prospective juror claims impartiality. [25] The stockholders' financial interest in Reich's case was closer to the prospective jurors' interest in Noey than the attenuated interest in Harmotta. The interest here is even clearer than that of a prospective juror who owns shares of a non-defendant insurance company with a financial stake in the outcome of the litigation. [26] Some courts have gone so far as to disqualify ... relatives within the prohibited degree of relationship to a stockholder in a cause where the corporation is a party or has pecuniary interest. [27] The trial court conducted voir dire in compliance with Rule 47(c) before dismissing the NANA shareholders for cause. The superior court accepted Stastny's explanation and ruled that the prospective jurors' incentive to protect their dividends justified their exclusion. We hold that the superior court did not err by dismissing NANA shareholders for cause.