Litigation Update on 14 Patronage Capital Cases in Eight States

Since 2009, at least 14 cases have been filed against electric cooperatives over patronage capital (or capital credits) in eight states: Alabama, Arkansas, Georgia, Missouri, New Mexico, North Carolina, South Carolina, and Texas. Sutherland has previously issued Legal Alerts regarding these cases—most are in active litigation, some have apparently settled (or are close to settling), and others have been resolved in the cooperative’s favor.

Depending upon the lawsuit, the plaintiffs allege that the cooperatives breached their obligations to members (and/or former members) and violated state law by:

- Failing to retire capital credits altogether

- Involuntarily discounting capital credits

- Retiring capital credits only upon the death of a member

- Preferring current members over former members when retiring capital credits.

Please see full alert below for more information.

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Topics:  Breach of Duty, Fiduciary Duty, Shareholder Litigation

Published In: Business Organization Updates, Civil Procedure Updates, General Business Updates, Energy & Utilities Updates

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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