Cobb EMC defends itself at Georgia Supreme Court

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By Margaret Newkirk

The Atlanta Journal-Constitution

With its chief executive now facing criminal theft and racketeering charges, Marietta-based Cobb EMC defended itself in a related civil case to the Georgia Supreme Court Monday.

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Justice Robert Benham of the Supreme Court of Georgia listens to arguments as Cobb EMC lawyers appeal a ruling that it had violated a previous settlement.

Vino Wong, vwong@ajc.com Justice Robert Benham of the Supreme Court of Georgia listens to arguments as Cobb EMC lawyers appeal a ruling that it had violated a previous settlement.

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Vino Wong, vwong@ajc.com AttorneyDwight Davis makes his oral argument before the Georgia Supreme Court as he appeals a ruling against Cobb EMC.

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Cobb EMC asked the Supreme Court to reject an April appellate court ruling that it had violated a settlement in that case by amending its bylaws to allow proxy voting in a court-ordered special election intended to change the co-op's leadership.

To rule otherwise would destabilize corporate governance statewide, Cobb EMC attorney Dwight Davis, of King & Spalding, said.

"It would be very disruptive," Davis said, in response to a question from the court.

Attorneys representing the electricity provider's customer-owners said the co-op broke settlement terms that specifically spelled out how the court-ordered special election was to be handled.

Pitts Carr, an attorney representing the customers, also said co-ops are subject to their own laws in Georgia, and urged the court to look at the case in the larger context.

He said the case uncovered severe conflicts of interest between Cobb EMC and the for-profit company that operated it, Cobb Energy, and that the co-op had shown a willingness to manipulate elections.

Board elections are key to co-op governance. State law exempts them from most regulations because customers can vote on co-op boards.

Co-op customers are also their owners. But they operate under different rules than investors in other companies, including investor-owned utilities. Co-op customers must invest as long as they are customers.

Cobb EMC has not had a board election since its legal troubles began in 2007.

The piece of the legal fight now before the Court is arcane: It involves the definition of "at."

The 2008 lawsuit settlement dissolved the relationship between Cobb Energy and Cobb EMC, and set out a series of meetings in which co-op customers would vote on most of the co-op's board within the next year.

The first vote was to be "at" a co-op meeting, where customers would decide whether or not they should be allowed to vote by mail, instead of by attending a meeting. Attorneys representing the customers were charged with developing the ballot language.

The co-op's board quietly usurped that, passing a bylaw amendment that would allow customers to submit proxy votes five days in advance of a meeting.

It then prepared its own proxy ballots, including language not only on the mail-in provision but on other changes in how customers participate in co-op governance.

Cobb EMC said the proxy votes meet the standard of being cast "at" a meeting.

Customer attorneys and the appellate court said they did not.