Cobb EMC sues customers behind lawsuit settled in 2008

Marietta-based Cobb EMC took aim at its opponents Thursday, suing six customers who settled a civil lawsuit against the co-op two years ago, along with one of their three lawyers.

The lawsuit, filed in Cobb County Superior Court, says one or more of the customers and the lawyer, David Cohen,  “instigated” last month’s criminal theft and racketeering charges against the co-op’s chief executive, Dwight Brown, and that they therefore violated the civil lawsuit’s settlement agreement. The new lawsuit seeks unspecified damages.

The agreement reached in 2008 barred the prosecution "of any duplicative, included or related claims."

Pat Head, district attorney for the Cobb Judicial Circuit, said he could not discuss the lawsuit because he might be called as a witness.

The new suit did not spell out why the co-op’s board or its lawyers believe the plaintiffs instigated the criminal probe. Dwight Davis, a King & Spalding partner who has been representing the co-op since 2009, would not elaborate, but said he had a good faith reason for making the claim.

The criminal investigation began after a high-profile civil fight that played out for more than a year, with Cobb County prosecutors sometimes watching from the back of the room.

Customers sued the co-op and its management in 2007 over the relationship between Cobb EMC and Cobb Energy, a for-profit company controlled and partly owned by Brown.

Cobb Energy operated the co-op for a mark-up that reached 11 percent. The lawsuit said the arrangement siphoned co-op assets and unjustly enriched insiders.

The criminal indictment detailed $50 million it said was either taken from or not properly paid to the co-op under the same arrangement. It said Brown had misled the co-op’s members to conceal that. And it said Brown benefited from the arrangement through his ownership of dividend-paying Cobb Energy stock.

The first hearing in the criminal case is scheduled March 3.

Cobb EMC also is fighting with the same group customers over another part of the 2008 settlement deal, which spelled out how future elections would be held.

The co-op violated that part of the deal shortly after signing it, an appeals court ruled in April. Cobb EMC has asked the state Supreme Court to reverse that ruling.

Co-op customers elect co-op governing boards. Because of the election dispute, Cobb EMC has not had an election in more than three years.

Cobb EMC has nearly 200,000 customers in the northwest Atlanta suburbs. The co-op spent nearly $3 million on litigation in 2010, according to its annual report.