Judge to rule on co-op’s lawsuit
A district court judge may have a ruling on the validity of three bylaws adopted by member-owners of Socorro Electric Cooperative by the end of the day.
Judge Albert J. Mitchell Jr., appointed to the case by the New Mexico Supreme Court’s chief justice, will address the merits of a lawsuit filed by the co-op last June. Socorro Electric is asking for declaratory judgment and injunctive relief from three bylaws adopted by member-owners at the 2010 annual meeting.
In order to challenge the bylaws, the co-op filed suit against all of its approximately 10,000 customers, who are member-owners of the non-profit corporation.
The bylaws in question:
• Call for the co-op’s board of trustees to voluntarily follow the state Open Meetings Act and Inspection of Public Records Act; • Allow members access to co-op books, records and audits, with the exception of records protected by the Privacy Act; and • Allow member-owners and the press to attend co-op board meetings and that a portion of the meeting be set aside for public comment. In addition, announcements of meetings are to be made in billing statements and advertised in local newspapers.
Socorro Electric’s argument is that the bylaws are impossible to implement or are illegal. The co-op has claimed in court filings that rural electric utilities are private, non-profit corporations not subject to open meetings laws that are applied to public entities. The co-op contends that allowing members and the press to attend meetings causes disruptions and prevents the corporation from conducting business in a manner it otherwise would.
While the co-op has allowed members and the press to attend meetings and has advertised meetings in the newspaper, it continues to deny requests to inspect records.
The hearing is scheduled for 10 a.m. today (Wednesday, May 18) at the Socorro County Courthouse and could last into the afternoon. Following the hearing on the merits of the case, the judge plans to address a countersuit against nine members of the board of trustees and five former co-op officials, which requests class-action certification.
Hope and Expectation
During a phone interview last week, Mitchell said he couldn’t promise he’d have a decision today on the validity of the bylaws.
“That’s everyone’s hope, and maybe the expectation, but I really can’t tell you,” he said. “Until I have all the information I need to have, I don’t know if I’ll be in position to make a decision or not.”
If not, “A decision will be made within 10 days. I feel comfortable in saying that,” he said.
The judge said he’s read all the briefs and motions that have been filed in the case since last summer, and he’d read them again before the hearing. But if anyone has anything else to add, he’s all ears.
“Everyone will have an opportunity to tell me anything they feel is relevant to their case. I’ve set aside adequate time for both sides to add to their arguments or call witnesses,” he said. “If someone thinks a witness is necessary, they’ll have an opportunity to call that witness and we’ll go from there.”
Eventually, the proceedings will get around to the countersuit and class action aspect — something the judge put on hold since the preliminary hearing last December.
“What we’ve been focusing on up to now is the original petition whether to grant relief from the bylaws. The next step in the case we reserved for all the issues regarding the class-action damages issues. That’s a whole new set of issues,” he said.
A New Set of Issues
The countersuit is aimed at those in charge of overseeing the operation of the co-op and not the co-op itself. The countersuit alleges that the board of trustees and its former general manager breached their fiduciary duties by:
• Mismanaging patronage capital — money returned to member-owners of the non-profit corporation;
• Engaging in wasteful spending, abusing per diem payments and taking compensation in excess of what was due to them;
• Failing to report financial information, accounting records and financial reports; and
• Maintaining a system of grossly unequal election districts and manipulating voting procedures and quorum calls at meetings.
The cross-claim defendants are former trustees Harold Baca, Juan Gonzales, Manuel Marquez and Herman Romero; current trustees Luis Aguilar, Leroy Anaya, Jack Bruton, Paul Bustamante, Leo Cordova, Prescilla Mauldin, Milton Ulibarri, Dave Wade and Donald Wolberg; and former General Manager Polo Pineda Jr.
Named as class representative in the class-action proposal is trustee Charlie Wagner of Magdalena, a leader in a reform effort that saw nearly a dozen new bylaws passed last year.
In answering the cross claim, the co-op’s court filing states:
• The cross claim defendants acted reasonably, fairly and in good faith;
• The officials fully performed their obligations to members as required by the bylaws, articles of incorporation and state and federal law; and
• Alleged damages are outweighed by the harm caused to the co-op, its trustees, employees and members if the cross complaint request for injunctive relief were granted.
Other Considerations
While a decision on the validity of the bylaws should come soon, Mitchell said a decision on the countersuit may be a long way off. The court will have to determine what falls under discovery and then the process of collecting that evidence could take several months.
“It may take quite a bit of discovery for (attorneys) to have enough information to give me to make a decision,” Mitchell said.
One issue sure to come up is the co-op’s insurance coverage — or lack of it — against defending a lawsuit.
At a hearing in March, co-op attorney Paul Kennedy said a letter from Federated Rural Electric Insurance Exchange states that the co-op may not be covered under its current policy to defend the counterclaim.
The counterclaim asks for the judge to have current trustees removed and for the named cross-claim defendants to pay damages out of their own pockets.
While the co-op’s original lawsuit was filed in Valencia County and two hearing have already been held at the courthouse in Los Lunas, Mitchell scheduled this hearing in Socorro as a matter of convenience. The vast majority of the 10,000 or so defendants in the case reside in Socorro County.
Contact T.S. Last