Cobb EMC suit plaintiffs want meeting delay

Plaintiffs suing the Cobb Electric Membership Co-op will be in court Monday arguing for a delay in the co-op’s annual meeting, scheduled for Sept. 4.

The co-op opposes the delay, one of its attorneys said Thursday, and will urge Cobb County Superior Court Judge J. Stephen Schuster to allow the annual meeting to proceed as planned.

“It would be completely disruptive to interfere with something that’s required by law,” said David Flint, an attorney for the co-op.

Annual meetings of the Marietta-based co-op, which serves nearly 200,000 customers in five counties, have generally been tame affairs. But this year’s meeting, the co-op’s 70th, could reshape its future.

Four EMC members are challenging three incumbents for seats on the 10-member board of directors. Three challengers are calling for stronger oversight of the co-op’s business affairs.

A fourth incumbent is running unopposed. All of the incumbents are defendants in the lawsuit.

The suit, filed last fall, alleges that the nonprofit co-op acted improperly and irresponsibly when it created a for-profit subsidiary, Cobb Energy, to manage its business and branch into other services such as home security. The complaint challenges the transfer of cash and assets to the business and the sale of stock to EMC executives and others.

A two-week effort this month to negotiate a settlement was unsuccessful, Flint said, so the case could be headed for trial in October.

In its legal motion to Schuster, the plaintiffs argue that the annual meeting should be delayed because the co-op and Cobb Energy haven’t fully disclosed key aspects of their financial relationship. The plaintiffs argue, for example, that the two entities have withheld information about who owns Cobb Energy stock.

They also claim that Cobb Energy, which earns management fees from Cobb EMC under a 40-year contract, “continues to gush red ink at a horrifying rate.”

Without a delay, “EMC members would be making important decisions about the future of their company, including the re-election of four defendant EMC directors, without any information about the financial turmoil … as well as the significant self-dealing in Cobb Energy stock,” the motion alleges.

In scheduling the hearing, Schuster said the parties should explain why “the court has the authority to postpone the meeting,” suggesting he may not be convinced that he has the power.

Co-op members, meanwhile, should soon be receiving copies of the co-op’s annual report, which includes biographical information about candidates for the co-op’s board of directors. The report was to go in the mail Thursday or today, Flint said.

The annual meeting is scheduled to begin at 10 a.m. at 1000 EMC Parkway in Marietta, according to the annual report.