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Class Action Suit Filed Against Carroll Electric Board!!!

Dear Concerned Carroll Electric Members and Supporters,

This is to inform you that a class-action complaint has been filed with the Arkansas Public Service Commission on behalf of members of Carroll Electric Cooperative and against its board of directors and management, seeking increased transparency, more democratic governance, repayment of capital credits, a halt to the use of herbicides without the landowners permission and more. A synopsis is attached below and the entire complaint may be seen here. The plaintiffs are Dane Schumacher and Gordon Watkins, representing the membership of Carroll Electric.

Legal recourse was taken following much careful consideration and only after more than three years of efforts to work with the CE board and management proved futile. Members have been repeatedly denied access to board meetings and minutes, have been denied the right to speak at members meetings, bylaws have been repeatedly changed to impede member participation and to make it virtually impossible to gain a seat on the board of directors. The property rights of members have been disregarded, with CE’s attorney implying that CE can do whatever they please on easements across landowner’s property. Members have been denied information about or access to their investment in the coop (capital credits).

This legal action is a last resort taken only after honest and good faith efforts were made to seek constructive change, efforts which were repeatedly rebuffed.

After consulting with numerous attorneys, both within Arkansas and elsewhere, we have assembled what we feel is the best possible team for this highly specialized and complex area of the law, particularly as it pertains to electrical cooperative corporations. Bill Ikard, assisted by Jordan Haedicke, of Ikard Wynne (IW), Austin, TX is lead counsel and Randall Bynum of Little Rock is local counsel. Bill Ikard and his associates were successful in winning a similar case against Pedernales Electric Coop in Austin, Tx, the largest coop in the US, resulting in increased transparency, access to board meetings, payment of capital credits to members, and criminal indictments against its CEO and others: see article in Austin Chronicle. IW is currently bringing a similar case against Socorro Electric Coop in New Mexico. Randall Bynum served as a past commissioner on the Arkansas Public Service Commission. This team is experienced, enthusiastic and optimistic about the merits of this case and the likelihood of a successful outcome.

While our attorneys have committed hundreds of hours of their time in preparing this case, we have made a commitment to help raise funds to cover out-of-pocket expenses, including such things as travel expenses, filing fees, expert witnesses, etc. These expenses could be sizable and our immediate goal is to raise $50,000. Currently, two members have committed $5,000 each and several others have pledged their support. An escrow account has been established in which donated funds will be deposited.
We Need Your Help!

If you, or someone you know, is able to contribute to this important work, please contact one of us for further information. As members, Carroll Electric is our cooperative. Please help us create a more transparent, responsive and democratic cooperative by supporting this effort.


Gordon Watkins, gwatkins@ritternet.com 870-446-5783
Randy Janowitz, randy@randyjanowitz.com 870-446-2176
Dane Schumacher, wild_firefarm@yahoo.com 870-545-3120
· Plaintiffs bring this class action under the law of the state of Arkansas seeking declaratory and injunctive relief to establish the rights of the Plaintiffs and the obligations of Carroll Electric under Carroll Electric’s bylaws and articles of incorporation, the statutes and common law of Arkansas.
· Carroll Electric’s management and board of directors have violated the bylaws by systematically concealing the amount of patronage capital the cooperative owes its members and have violated bylaws respecting compensation, benefits and reimbursement expenses.
· Plaintiffs seek to enjoin the Defendants from further violations of their bylaws and articles of incorporation, the statutes and common law of Arkansas.
· Plaintiffs seek to prevent the Defendants from continuing to deny (i) the Plaintiffs free and unfettered access to the cooperative’s financial, operational and managerial information, (ii) open and unabridged participation in corporate governance of the cooperative (including but not limited to the election of the cooperative’s board of directors) and (iii) Plaintiffs’ determination of whether or not to use environmentally destructive herbicides on the cooperative’s rights of way which traverse the Plaintiffs’ properties.
· Longstanding cooperative principles, established in common law and enumerated as well through federal tax case law, require a cooperative to (1) subordinate capital; (2) ensure democratic control by the owner-members themselves; and (3) vest in and allocate among the owner-members all fruits and increases arising from their cooperative endeavor (i.e., the excess of the operating revenues over the costs incurred in generating those revenues), in proportion to the owner-members’ active participation in the cooperative endeavor.
· The Plaintiffs also bring this class action for redress for injuries resulting from Defendants’ violations of fiduciary duty, breach of contract, and unjust enrichment.
· An order is sought declaring the rights of the Class under the bylaws to inter alia: free access to cooperative financial, operational and managerial information; membership lists; board of directors meetings and minutes; open records; and open meetings.
· An order is sought to oblige Carroll Electric to regularly retire capital credits on a reasonable and systematic basis, and otherwise comply with its bylaws and duty to return the capital credits from time to time, and to regularly provide each member with full information regarding their capital credit account.
· An order is sought to oblige Carroll Electric to amend the undemocratic provisions of its bylaws and institute fair, open, transparent, and democratic governance.
· An order is sought to oblige Carroll Electric to stop the use of herbicides, when a member has made such a request, or securing the permission of a member prior to the application of herbicides.
· Plaintiffs have been required to retain the services of attorneys to bring this cause of action. Plaintiffs are entitled to recover their reasonable and necessary attorneys’ fees under Ark. R. Civ. P. 54(e), Ark. Code Ann. § 16-22-308 and on equitable grounds.

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