Georgia Supreme Court Rules Cobb EMC Board Violated Settlement Agreement

The Georgia Supreme Court today said the president and directors of the Cobb Electric Membership Corp. violated a settlement agreement with its members with a change of the co-op’s bylaws three years ago.

In a 5-1 decision released this morning, the court ruled that a 2008 amendment to the co-ops bylaws allowing proxy voting “violates the spirit, if not the letter, of the agreement.” Chief Justice Carol Hunstein, who wrote the decision for the court, said the amendment “fundamentally alters the circumstances pursuant to which the members conduct business.”

The embattled power co-op has faced legal and public relations troubles as far back as 2007. In addition, the co-op has not held an election for board members since before that time. The ruling does not allow for an immediate election but sends the case back to the lower courts for more consideration.

This case originates with a lawsuit filed by Cobb EMC members in October 2007.  A year later, all of the parties in the lawsuit reached a settlement agreement that called for the transfer of $112 million in assets back to the co-op and a schedule that would set new board elections for 2009.

But in December 2008, the board amended the bylaws to allow proxy voting at meetings in which director elections were not a part. Co-op members returned to court to challenge the by-law change and won decisions at the Superior Court and appellate court levels before the decision today.

In a statement published by the Atlanta Journal-Constitution, Superior Court Judge Stephen Schuster, who heard the initial case, said he “reviewed and fully supports” the latest ruling and that, when the case is returned to him, “the court will do everything in its power to ensure the prompt implementation of director elections. The court believes the members must be given the opportunity to decide the leadership and direction of the EMC.”