Cobb Superior Court Judge Stephen Schuster, who called the suit “trench warfare at its worst,” signed off on the $98 million settlement Tuesday, which is the largest class-action settlement in Cobb County’s history.
Cobb EMC is a nonprofit owned by its 175,000 customers, called “members,” and is accused of failing to return excess revenues to customers.
The suit alleged that $286 million should have been returned to members but instead was kept. An estimated 900,000 customers are now owed money. The EMC offered to settle the suit by paying $98 million, about one-third of what the suit said it owes, and that was agreed to by the plaintiffs’ attorneys.
At the end of each year, the EMC places its excess revenue in a capital account where it is assigned to the members based on how much electricity they use.
Until the lawsuit was filed in 2010, the last time Cobb EMC refunded capital credits to its members was in 1976, when it returned $500,000.
Payouts under the settlement range from fewer than $100 to several million dollars. Members can choose to receive an immediate payout of a portion of their capital credits or to receive the full amount on a yearly basis over 24 years.
The Cobb Board of Education has been offered the largest payout. It opted to take an immediate lump sum of $1.8 million. If the board had chosen to receive payments over 24 years, it would have received $5.15 million.
The district isn’t sure yet how it will spend the cash or when it will receive a check, said school board Chairwoman Kathleen Angelucci, who sat in court Tuesday next to Vice Chairman Randy Scamihorn.
Still, it’s a needed boost for the school system facing an $80 million shortfall.
“I think this will go a long way,” Angelucci said.
The Cobb Board of Commissioners is another top customer, offered a lump sum of almost $1.6 million or a staggered payment of $4.9 million that would flow into county coffers over 24 years.
The Cherokee County Water Authority, Cherokee Board of Education and city of Powder Springs are among other government entities that will get a refund.
“These public entities have benefited very much so from this litigation,” said Hylton Dupree, attorney for current EMC members, of Marietta-based Dupree & Kimbrough LLP.
Nonprofits will also get a check. The YMCA of Cobb has been offered a one-time payout of $38,419 or $182,084 over 24 years.
Heated debate led to settlement
Attorneys representing both current and former EMC members sat in court Tuesday morning alongside lawyers for the EMC praising each other for their work on the case and dedication.
That good-natured tone followed months that attorneys spent in combative mediation sessions directed by former Georgia Attorney General Michael Bowers, who was appointed by the court as a special mediator to oversee interaction between the parties.
Bowers called the 10 mediation sessions he oversaw a “dogfight.”
“I have been a mediator for 15 years … I have never mediated as contentious a case as this one,” Bowers said.
Kevin Moore, attorney for Cobb EMC, said the parties “couldn’t even agree on what we disagreed on.”
Some of the debate between lawyers involved the amount Cobb EMC would be required to pay in attorney’s fees. The EMC will pay $19.8 million, to be divided between the seven attorneys involved in the suit. That amount was negotiated down from the recommended amount of $29.4 million.
The settlement was approved by Judge Schuster on Tuesday without any objections.
One EMC member who filed an official objection claiming the utility didn’t offer enough money and made it too difficult to get the cash withdrew his objection after being ordered to undergo a deposition in late January.
Schuster called the settlement fair and praised attorneys for treating all claims equally no matter the size.
“Whoever thought this day would come?” Schuster said before signing off on the deal.
Criminal case still unresolved
The approval of the settlement isn’t the end of legal woes involving Cobb EMC.
Former Cobb EMC CEO Dwight Brown was indicted in July 2011 on more than 30 counts that accused him of stealing millions of dollars from the EMC’s member customers. Charges include theft by taking, conspiracy and violating the Racketeer Influenced and Corrupt Organizations or RICO Act, among other criminal charges.
Brown has not yet gone to trial, but his attorneys argued before the Georgia Supreme Court earlier this month that Brown’s rights were violated because alleged victims with interest in the outcome of his case were improperly allowed to sit on the grand jury that decided Brown should be charged.
Former Gov. Roy Barnes, who represented Brown, told the Supreme Court the indictment should be overturned for a second time. The first round of indictments against Brown was dropped by Cobb Superior Court Judge Robert Flournoy in March 2011 because he said the charges weren’t delivered in public during an open court session.
No opinion has been issued yet by the state’s highest court.