Cobb EMC exec seeks dismissal of lawsuit
Filing argues that critics don't understand the law


The Atlanta Journal-Constitution
Published on: 10/12/07

The chief executive officer of Cobb EMC and its for-profit affiliate Cobb Energy has asked a judge to throw out a lawsuit against him and the companies.

The filing in Cobb Superior Court on behalf of Dwight Brown called a Sept. 12 lawsuit by co-op members "fatally defective." That suit accuses Brown and other officials of siphoning off the co-op's funds to benefit the for-profit.

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But Thursday's response said the complaint "demonstrated stark ignorance of the laws governing Cobb EMC," and used "flimsy allegations" to stain the reputations of Brown, Cobb EMC and Cobb Energy with the "odious taint of `fraud' and `self-dealing.'"

Cobb EMC is a 189,000-member, customer-owned non-profit electric cooperative based in Marietta.

Cobb Energy is a for-profit affiliate that earns a profit to operate the co-op, in addition to offering a range of other, for-profit products and services.

Brown heads both, and is a shareholder in Cobb Energy.

The suit against the co-op, Cobb Energy and Brown was filed on behalf of two co-op members, Sims Maddox and his son. The plaintiffs want class action status.

The lawsuit said the companies and Brown had "improperly squandered, mismanaged and converted the resources of Cobb EMC." It asks the court to force the two companies and Brown to disclose details of their financial dealings and the financial relationships between Cobb Energy and co-op executives. It also seeks information on how much the co-op pays for Cobb Energy's management services and how much Brown gets paid to be Cobb Energy CEO.

Brown's response includes several pages praising the co-op's growth leadership, track record and vision.

It says Brown, who joined Cobb EMC as a vice-president in 1980, has been a "driving force for Cobb EMC's growth."

"Cobb EMC has a tradition of innovative leadership," it says. "It has enjoyed success largely because it has tackled difficult issues with bold vision and determination."

It says the co-op formed Cobb Energy to protect itself from market deregulation and hostile takeovers. The new company did that, the motion says, by spreading out costs among a range of for-profit services and by offering customers more such services.

The motion's argument for dismissing the lawsuit, though, is based on alleged legal flaws in the complaint.

It says the complaint used general corporation law instead of state laws that are specific to electric cooperatives, for instance.

It also says the lawsuit is too vague and resembles a fishing expedition intended to intrude in corporate management — an intention "traditionally disfavored" in Georgia law.

Further, it says most of the complaints in the case are derivative complaints, but that the plaintiffs failed to follow the mandatory process for filing such complaints.

Those steps include giving the co-op a chance to meet demands before going to court.



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