Electric co-op alters bylaws
BERRYVILLE -- In what Carroll Electric Cooperative Corporation (CECC) terms "positive" and attorney Bill Ikard of Ikard Wynne, LLP terms "unacceptable" and "egregious," the electric co-op Board of Directors changed its bylaws on Oct. 27 to prohibit class action suits against itself, among other changes.
The board voted these changes in while the merits of a complaint filed by Ikard in July, initiated by Gordon Watkins and Dane Schumacher on behalf of all co-op members, have yet to be decided by the Arkansas Public Service Commission (APSC).
The complaint requests declaratory and injunctive relief, seeking "increased transparency, more democratic governance, repayment of capital credits, a halt to the use of herbicides without the landowners' permission" and more.
The bylaw amendements compel members to bring disputes to arbitration.
The party requesting arbitration must pay for its initiation, and whoever loses will pay the costs, including attorney fees. If the dispute is dismissed, the party bringing the complaint must still pay the costs of the other.
"There won't be any situation where the claimant will be the co-op, it will always be a member," Ikard said. "The only time the co-op would have a claim against the member is for account delinquency, and they'll just cut off the electric."
He said arbitration can incur costs anywhere from $5,000 to $50,000, depending on the nature of the claim and how long it takes.
The prohibition against participating in "any class action, or putative class action" against the co-op could constitute a violation of the membership agreement, Ikard said.
"That would mean you would not be able to obtain electricity, and Carroll Electric has a monopoly on providing electricity to its service areas."
Asked why the co-op board amended the bylaws while there is a pending class action complaint before the APSC, Nancy Plagge, director of Corporate Communications, replied with this written statement:
"The board recognizes the irony of any class action complaint or lawsuits against a cooperative. The cooperative exists for the benefit of its members. Class action litigation can be very expensive and boils down to a member suing themselves. As a cooperative, these expenses would just drive up the cost of services received and enjoyed by members.
"The board believes adding mediation and arbitration measures to resolve disputes are fair, productive, and in the best interest of Carroll Electric's membership."
She said she believes the change is not retroactive to before Oct. 27 and "probably" would not affect the current complaint. However, Ikard said the APSC has not yet certified the class of members under the complaint as either B-2 "non-opt out" or "putative." When it does, either way the members could be found in violation of the bylaws.
"That's why it seems to me that that single sentence is so preposterous and unworkable that I can't imagine this was done in good faith," Ikard said.
He said his team is contemplating taking action with regard to the amendment.
Some other changes include board members being subjected to random drug testing when they show up to meetings, appointment of a "nominating official" to review applications of those seeking a board position, a change in the nomination application window, a nominee being a resident member of the co-op for at least three years, and other changes.
Plagge said the full text of the amended bylaws will be included in the December issue of the co-op's monthly publication, Arkansas Living.