Cobb EMC reaches $98M settlement
by Lindsay Field
October 11, 2013 12:42 AM | 23605 views | 4 4 comments | 21 21 recommendations | email to a friend | print
MARIETTA — A nearly four-year, bitterly fought civil lawsuit has resulted in a staggering $98 million settlement to be paid out to nearly 1 million of Cobb EMC’s current and former members.

Lawyers involved in the case said it may well be the largest settlement ever won in a Cobb County court.

Cobb Superior Court Judge Stephen Schuster signed a preliminary order Thursday that outlines a strategy for paying current and former Cobb Electric Membership Corp. members their portion of “capital credits” that were owed but never paid by the nonprofit electricity co-operative.

Customers doing business with the Marietta-based nonprofit between its founding in 1938 and Dec. 31, 2012, are eligible for the payments. There are an estimated 900,000 such customers.

Cobb EMC serves more than 177,000 residential and commercial customers, also called members, in nine counties — Cobb, Bartow, Cherokee, Fulton and Paulding in the metro Atlanta area and Randolph, Calhoun, Quitman and Clay counties in southwest Georgia.

“These have been difficult negotiations over a problem to which there is no perfect solution,” said Chip Nelson, Cobb EMC president and CEO in a news release.

“The court has preliminarily approved the settlement so that we can disburse the required capital credits, close the books on this chapter in our company’s history, and put an even stronger focus on our core mission of providing electrical power to our service areas,” Nelson said.

What is a ‘capital credit’?

At the end of each year, Cobb EMC places its excess revenue in a capital account where it is assigned to the members based on how much electricity they use. The goal is to refund the members this money when Cobb EMC is in the financial position to do so.

The complaint, which was filed by two separate parties — former and current Cobb EMC members — is that Cobb EMC failed to repay its members what they were owed. The original suit was filed Jan. 15, 2010.

How will current and former customers be paid?

In Thursday’s proposed settlement, Cobb EMC will set aside an estimated $34 million to be paid to account holders that were members up through the first half of 1988, or more than 24 years ago. This is subject to a final approval hearing Feb. 24, 2014, by Schuster.

Upon final approval, these members will be mailed a check for their share of the settlement.

The remaining amount, an estimated $64 million, will be reimbursed to those who joined the co-op between the second half of 1988 and Dec. 31, 2012.

Members will have two options to receive their money. They can be paid the amount based on present-day value now or choose to get paid 100 percent of the payout over the next 24.6 years.

There are about 900,000 members who qualify for the claim. The settlement amount will be paid by the company.

The average pay out per member will be determined after claims have been submitted.

How to file a claim?

Garden City Group Inc. of Garden City, N.Y., has been hired to contact members and determine who will want to be included or excluded in the claim. This process is expected to begin in the next few weeks.

Letters will be mailed to members, and a website and phone number will be set up for individuals or businesses to contact for more information or to file claims.

The claim filing period will remain open until Feb. 10, 2014.

Everyone thankful for long-awaited settlement

Schuster presided over Thursday’s 45-minute hearing before a crowd of about 40 people. Those in attendance included members who filed the civil suit and members of Cobb EMC’s Board of Directors and executive board. They were introduced and recognized by their attorneys.

“I think it’s important for the court to see those that are here in support of this process and have been involved,” Schuster said, adding that the last board was in attendance only at the behest of a court-ordered subpoena.

Schuster went on to say that the board members and leaders at Cobb EMC “truly saved” the co-operative and turned the company around.

“Having worked through those dark years and prior litigation, you deserve acknowledgment and thanks from everybody,” he said.

“It is indeed a new day,” said attorney Kevin Moore with the Marietta firm Moore Ingram Johnson & Steele. His father, John Moore, was his co-counsel. They were hired to represent Cobb EMC last September.

“This was an issue and a matter not of this board of directors and not of this management’s making but something that they had to deal with,” Kevin Moore said. “And that choice was to continue to litigate this case. Cobb EMC had extremely solid and good-founded defenses for this case.”

The plaintiffs in the case, both current and former members, were represented by Samuel Pierce Jr. of Roswell; Charles Siegel of Dallas, Texas; Paul Lawrence of Middleburg, Va.; Larry Lahman of Enid, Okla.; and Hylton Dupree and David Cohen of Marietta.

“Early in this process you made the statement that you wanted to see some real money for the members and former members of Cobb EMC,” Lawrence said when delivering details of the settlement to Schuster. “And I think we have achieved that in the settlement.”

‘Highly adversarial’ case

The mediator over the case, who also addressed Schuster on Thursday morning, was former state Attorney General Michael Bowers. He worked with both sides between October 2012 and January.

“There were moments when I thought this is not going to work,” Bowers said. “It was highly adversarial. I thought many times, ‘We’re just not going to reach an agreement.’”

He said they fought about many things, from every nickel in the agreement to the percentage points.

“I have mediated now in the 15 or so years that I have been in private practice, something in the neighborhood of 400 cases and this was as hard fought a case as I have ever mediated,” Bowers said. “It was as great an honor as I have ever had, in terms of mediating cases, and I thank Your Honor for this opportunity.”

Schuster asked if members of both parties wanted to add anything, but they all declined.

Comments-icon Post a Comment
Mad EMC Member
November 17, 2013
Hear is a rub...they're going to pay the present value based upon 24.6 years at 12%. Why 24.6 years? Why 12% discount rate? The credits are due and payable TODAY at full value. The answer to why 24.6 years and 12% is to screw the members...We'll receive pennies on the dollar.
Cobb EMC Member
October 11, 2013
Another ourrage !

How much "member money" has been spent on lawyers, how much do lawyers get in this "stealment" ? How much do EMC member owners really get ?

Pretty simple - the "excess charges" to EMC members for electricty should have been paid back to them without any law suits or settlements.

Holy cow Cobb EMC is a monopoly co-oop !
Just Wait
October 11, 2013
It's bad enough that the members got taken for a ride all these years, now the lawyers will get millions of dollars to settle it.
Roy J
November 13, 2013
Members will probably get less than $100 each. They estimate there are about 900,000 former and current members. Class Action Suits are mainly a means to make lawyers a ton of money; the litigants get very little because they are so many. Class Action Lawyers actively seek cases that can become class actions.

Cobb EMC was better off just following the non-profit rules and paying the credits than litigating.

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