Cobb EMC reaches $98M settlement

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Cobb EMC reaches $98M settlement
by Lindsay Field
October 11, 2013 12:42 AM | 734 views | 0
MARIETTA — A nearly four-year, bitterly fought civil lawsuit has resulted in a staggering $98
million settlement to be paid out to nearly 1 million of Cobb EMC’s current and former members.
Lawyers involved in the case said it may well be the largest settlement ever won in a Cobb
County court.
Cobb Superior Court Judge Stephen Schuster signed a preliminary order Thursday that outlines
a strategy for paying current and former Cobb Electric Membership Corp. members their portion
of “capital credits” that were owed but never paid by the nonprofit electricity co-operative.
Customers doing business with the Marietta-based nonprofit between its founding in 1938 and
Dec. 31, 2012, are eligible for the payments. There are an estimated 900,000 such customers.
Cobb EMC serves more than 177,000 residential and commercial customers, also called
members, in nine counties — Cobb, Bartow, Cherokee, Fulton and Paulding in the metro Atlanta
area and Randolph, Calhoun, Quitman and Clay counties in southwest Georgia.
“These have been difficult negotiations over a problem to which there is no perfect solution,” said
Chip Nelson, Cobb EMC president and CEO in a news release.
“The court has preliminarily approved the settlement so that we can disburse the required capital
credits, close the books on this chapter in our company’s history, and put an even stronger focus
on our core mission of providing electrical power to our service areas,” Nelson said.
What is a ‘capital credit’?
At the end of each year, Cobb EMC places its excess revenue in a capital account where it is
assigned to the members based on how much electricity they use. The goal is to refund the
members this money when Cobb EMC is in the financial position to do so.
The complaint, which was filed by two separate parties — former and current Cobb EMC
members — is that Cobb EMC failed to repay its members what they were owed. The original
suit was filed Jan. 15, 2010.
How will current and former customers be paid?
In Thursday’s proposed settlement, Cobb EMC will set aside an estimated $34 million to be paid
to account holders that were members up through the first half of 1988, or more than 24 years
ago. This is subject to a final approval hearing Feb. 24, 2014, by Schuster.
Upon final approval, these members will be mailed a check for their share of the settlement.
The remaining amount, an estimated $64 million, will be reimbursed to those who joined the
co-op between the second half of 1988 and Dec. 31, 2012.
Members will have two options to receive their money. They can be paid the amount based on
present-day value now or choose to get paid 100 percent of the payout over the next 24.6 years.
There are about 900,000 members who qualify for the claim. The settlement amount will be paid
by the company.
The average pay out per member will be determined after claims have been submitted.
How to file a claim?
Garden City Group Inc. of Garden City, N.Y., has been hired to contact members and determine
who will want to be included or excluded in the claim. This process is expected to begin in the
next few weeks.
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or businesses to contact for more information or to file claims.
The claim filing period will remain open until Feb. 10, 2014.
Everyone thankful for long-awaited settlement
Schuster presided over Thursday’s 45-minute hearing before a crowd of about 40 people. Those
in attendance included members who filed the civil suit and members of Cobb EMC’s Board of
Directors and executive board. They were introduced and recognized by their attorneys.
“I think it’s important for the court to see those that are here in support of this process and have
been involved,” Schuster said, adding that the last board was in attendance only at the behest of
a court-ordered subpoena.
Schuster went on to say that the board members and leaders at Cobb EMC “truly saved” the
co-operative and turned the company around.
“Having worked through those dark years and prior litigation, you deserve acknowledgment and
thanks from everybody,” he said.
“It is indeed a new day,” said attorney Kevin Moore with the Marietta firm Moore Ingram Johnson
& Steele. His father, John Moore, was his co-counsel. They were hired to represent Cobb EMC
last September.
“This was an issue and a matter not of this board of directors and not of this management’s
making but something that they had to deal with,” Kevin Moore said. “And that choice was to
continue to litigate this case. Cobb EMC had extremely solid and good-founded defenses for this
The plaintiffs in the case, both current and former members, were represented by Samuel Pierce
Jr. of Roswell; Charles Siegel of Dallas, Texas; Paul Lawrence of Middleburg, Va.; Larry Lahman
of Enid, Okla.; and Hylton Dupree and David Cohen of Marietta.
“Early in this process you made the statement that you wanted to see some real money for the
members and former members of Cobb EMC,” Lawrence said when delivering details of the
settlement to Schuster. “And I think we have achieved that in the settlement.”
‘Highly adversarial’ case
The mediator over the case, who also addressed Schuster on Thursday morning, was former
state Attorney General Michael Bowers. He worked with both sides between October 2012 and
“There were moments when I thought this is not going to work,” Bowers said. “It was highly
adversarial. I thought many times, ‘We’re just not going to reach an agreement.’”
He said they fought about many things, from every nickel in the agreement to the percentage
“I have mediated now in the 15 or so years that I have been in private practice, something in the
neighborhood of 400 cases and this was as hard fought a case as I have ever mediated,”
Bowers said. “It was as great an honor as I have ever had, in terms of mediating cases, and I
thank Your Honor for this opportunity.”
Schuster asked if members of both parties wanted to add anything, but they all declined.
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