A Superior Court judge erred in allowing Cobb EMC to make a bylaw amendment that would allow for proxy voting at future member meetings, according to a unanimous ruling Tuesday from the state Court of Appeals.

The three appeals judges agreed that the Dec. 12, 2008, bylaw change made unilaterally by the board of directors just days after a settlement in an October 2007-filed lawsuit was "contrary to the terms of the Settlement Agreement."

It was clearly stated in the settlement that plaintiffs, not the co-op, were to draft language regarding future voting options, according to the ruling.

Further, the settlement called for the co-op to "cooperate fully" with the plaintiffs. Since EMC officials made the changes without notification to the plaintiffs, "any finding that the amendment constituted 'full cooperation' with the derivative plaintiffs was clearly erroneous," the judges stated.

Lead plaintiffs' attorney Pitts Carr said, "The board members, after entry of the order (settlement), took it on themselves in a secret meeting to change the procedures without notice to the members. The board adopted proxy voting controlled by management. The Court of Appeals reconfirmed that the members are in charge of determining appropriate voting procedures, not the board acting in the dark of night with no notice."

The case has been remanded back to Cobb Superior Court Judge J. Stephen Schuster, who is to draft a new order consistent with the Court of Appeals' opinion. Once the new order is drafted, the original meeting that was to occur within 60 days of the Dec. 2, 2008, settlement can occur.

At that meeting, members will vote in person on a proposal drafted by plaintiffs that would allow mail-in written ballots for future election of directors, Carr said. It will not be an option for proxy voting, as proxy voting is just a way for management to stay entrenched, Carr said.

"Ninety-five percent of all proxy votes are in favor of management," he said.

Cobb EMC provides power to about 190,000 members in five counties. Asked whether members will attend the meeting and vote in favor of the mail-in ballot option, Carr would only say, "There will be a notice for the meeting, and it will be very heavily attended, in my opinion," based on the events that have unfolded and reported on over the last couple years.

After that meeting, the 2008 and 2009 director elections - which have been postponed due to legal sparring - could finally occur.

"Potentially, three meetings could be held in the next few months," Carr said.

Those meetings would be followed by the 2010 elections. Election meetings are generally held in September.

All this, however, could be delayed further if the co-op decides to ask the Georgia Supreme Court to review the case.

"I don't think they will, but I don't know," Carr said.

Co-op attorney Dwight Davis, with Atlanta-based King & Spalding, said he is "obviously disappointed" with the Court of Appeals' decision. He said he will evaluate the opinion, which the co-op learned about around 9 a.m. Wednesday, more closely to determine if the co-op should ask the Supreme Court to look at the case.

A decision has to be made within 10 days, he said.

Davis predicts, even if the co-op decides against asking the Supreme Court to review the case, there will be a few more legal disputes in front of Schuster before the Cobb judge issues the new order.

The '08 elections will be for four directors on the 10-member board. Three out of the four incumbents have at least one challenger. The '09 and '10 elections will round out the rest of the board, with three directors up in each election. No challengers have yet been vetted by the credentials committee for the '09 and '10 elections, and will not be until a judge rules that the elections can move forward, co-op spokesman Chip Stewart said last week.

In October 2007, a handful of EMC customers, led by Butch Thompson and Bo Pounds, filed a lawsuit against the co-op alleging breach of fiduciary duty, gross mismanagement, waste of corporate assets and unjust enrichment in relation to the management and operations of the co-op and Cobb Energy. The settlement in the case was approved Dec. 2, 2008. Then on Dec. 12, 2008, the co-op board made the bylaw amendments that Carr believed were illegal under the settlement. Schuster disagreed and Carr appealed to the Court of Appeals of Georgia.

In addition to the proxy voting amendment, plaintiffs also claimed that bylaw amendments - which limited the business that can be conducted at member meetings and increased the number of directors needed to call a special meeting - were also in violation. However, the state Court of Appeals on Tuesday dismissed those claims as moot since they were not related to the settlement.

A year ago, search warrants were issued and dozens of Georgia Bureau of Investigation agents descended on Cobb EMC's headquarters and the homes of President and CEO Dwight Brown, the co-op's board chairman and two other directors seeking documents, computers and video files that may - or may not - show evidence of racketeering and theft. There are no new updates on the ongoing investigation.