Lawsuit Watch
This page tracks the progress of the class action lawsuit against PEC. Most recent action is at the top of the page.
The Lawsuit may actually be over.
The Third Court of Appeals made its decision in the first week of March 09 to uphold the trial court’s settlement agreement. While it is possible for David Hall to appeal the decision to the Texas Supreme Court within 40 days (exact timing needs to be verified), it does not look likely as of this writing (2 days after the decision was announced). Hall has not announced a decision either way.
Related articles:
Settlement of PEC Lawsuit upheld (March 5, Austin American Statesman)
Appeals court upholds co-op settlement (March 6, Austin American Statesman)
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Austin American Statesman: Pedernales settlement halted at the last minute 6/6/08
Horseshoe Bay attorney files appeal in state appeals court that could delay deal by years.
The settlement was approved by Judge Dietz on May 5th. It goes into effect 30 days later, unless an appeal is made by an affected party (including any PEC member).
A settlement has been reached between the plaintiffs and PEC. However many PEC members are not happy.
A sample Objection letter is now available. Please feel free to alter it to reflect YOUR views.
According to the settlement terms, after all is signed and sealed, we will still be left with the majority of the Board scoundrels who got us into this mess. They will not be held accountable for anything they have done, no matter how irresponsible, negligent, fiscally irresponsible, self-serving or even criminal. No one who received the self-dealt largess of extravagant compensation and benefits will be made to repay a dime that they extracted from the coop’s coffers. And we, the member-owners will be left with legal fees amounting to millions of dollars, much of which will not even be covered by the organization’s errors and omissions insurance policy because, clearly, the actions of the Board and management were far worse than errors and omissions.
You have a right to object to this settlement. To do so, you must file your written objection with the Travis County District Clerk on or before May 2, 2008 [ed. note: to have your objection considere at the April 30 fairness hearing, you must file your objections on or before April 28]. All objections must identify the case and cause number of this suit: Worrall, et al. v. Pedernales Electric Cooperative, Inc., et al.; Cause No. D-I-GN-07-002234 in the 353rd Judicial District Court of Travis County, Texas, and must by filed with the Travis County District Clerk with copies to all counsel of record at the following addresses:
Amalia Rodriguez-Mendoza
Travis County District Clerk
PO Box 679003
Austin TX 78767-9003
William Ikard
Ikard Wynne LLP
515 Congress Avenue, Suite 1320
Austin, TX 78701
David C. Duggins
Clark, Thomas & Winters PC
300 West 6th Street, 15th Floor
Austin TX 78701
Stephen E. McConnico
Scott, Douglass, & McConnico
600 Congress Avenue, 15th Floor
Austin, TX 78701
All written objections filed with the Travis County District Clerk on or before April 28, 2008 will be considered at the April 30 fairness hearing before Judge Dietz.
Read the full settlement terms here: http://www.pec.coop/Documents/SettlementAgreement.pdf
The following is an open letter from Carlos Higgins (of The Silver Haired Legislature, and candidate for PEC Board) about the settlement terms.
April 9, 2008
To: PEC Members/Owners
If you’re paying attention to the PEC lawsuit settlement, you’re fuming or seething by now. If you’re not paying attention, this note is for you. It’s time to get your blood boiling, too.
The letter you should have just received that tells about the proposed settlement briefly explains what it’s all about. The entire settlement can be found on the PEC WEB site, at http://www.pec.coop/Documents/SettlementAgreement.pdf
You should read it. If you are a PEC member, and the Court approves this settlement, you are bound by it, like it or not. In my opinion, the settlement terms are not just questionable; they are offensive and outrageous. It’s 33 pages long, but if you read nothing else, at least read pages 11 to 15. You owe that to yourselves.
If the Court approves this settlement, you and me and all other PEC members are agreeing that, so far as any kind of court action or other claim of any kind is concerned, the PEC Board members and upper management did absolutely nothing wrong. We are agreeing that they should never be held accountable for whatever they may have done or failed to do if it relates directly or indirectly to the PEC. And this includes anything, whether it is known or unknown, including anything that might be uncovered by the 10-year audit that is coming up soon.
We’re also agreeing that whatever compensation or benefits any of these Board members or upper management managed to get for themselves is just fine with us, and we won’t contest it at all, even if the basis for it is some obscure and private oral agreement. And the same goes for the subsidiary companies. No matter what went on with them, we’re agreeing that it’s all OK with us. Just to summarize, if we agree to this settlement, I think maybe we should rename PEC and call it the Alfred E. Newman coop, and all of us should say, in unison, “What? Me worry?”
If you don’t care what happens with this lawsuit, who will? PEC’s Board members and upper management get everything they could possibly want under the settlement terms. PEC itself is still under the control of these Board members, so our coop would not stand in the way of the settlement.
The people who brought the lawsuit have done us all a huge service, but they’ve spent a great deal of time, effort and money in pursuing the lawsuit, and they deserve to be fully reimbursed. Although they likely do not think much of most of the settlement terms, the terms do include reimbursement to them. That makes it difficult for them to stand in the way of a settlement.
The others that would be fully bound by this settlement happen to be all the PEC members. And if we seem to be happy with it, or just disinterested, what’s the Judge going to do? Probably, approve the settlement.
The Judge is giving us a fair chance to speak up. If you want to object to the settlement, the letter explains how you do that. But you have to do it before May 2nd. Actually, April 28th is better, if you read the last paragraph in the instructions copied below.)
It seems to me you’d have many objections. The PEC is not regulated at all by Texas government. That has been left up to the membership, but we’ve had no control at all up to now. With the new elections to be held shortly, maybe we members can finally gain some control. But it would be a colossal shame for this lawsuit to be settled just before we gained any control, and it took away from us any possibility at all of discovering the extent of the wrongs at the PEC, and doing something meaningful about those wrongs.
It seems to me that any settlement should be delayed at least until some reasonable time after the election. A new Board just might decide that this settlement is not even slightly in the best interest of the PEC or its members. A new Board just might decide that those who brought the lawsuit did such a great service for all of us, that the PEC should voluntarily reimburse them fully, and that we’d be far better served doing that outside of a lawsuit settlement, rather than to allow our collective hands to be totally tied forever by this one-sided settlement.
It seems to me that each of you reading this would be concerned enough and motivated enough to do these things:
1. Read the settlement terms. If you object, say so – to the Court. Let the Court know that, as a matter of basic fairness, PEC members need some more time to clean house, and this proposed settlement would get in the way of fairness and justice. Get your objections filed with the Court by April 28th.
2. Forward this message (or your own version of it) to other PEC members, and ask them to spread it to others. The Court probably won’t be much impressed if only a dozen or so out of more than 200,000 members have objections. (And you should express whatever your objections, whatever they might be, in your own words.)
3. Express your views to local newspapers and homeowners’ groups. Get the word out about the importance of responding to the Court, so this settlement can be stopped or at least delayed. Newspapers, other media and any of you are free to copy any or all of the opinions I have expressed here.
You get one bite at this apple. If the settlement is approved by the Court, none of us can do anything at all in any court – ever – about whatever has been going wrong lately with our PEC, whether or not we know about the wrong now or discover some outrageous act later.
Get cracking!
Respectfully and sincerely,
Carlos Higgins
PECmem@sbcglobal.net
Though we are in possession of the full text of depositions of Burnett, Linebarger, and Harmon and Fuelburg and believe them to be open to the public, we’re waiting for clarification from the lawyers as to whether Fuelburg’s deposition is still classified ‘confidential’ in full or part before we publish them on this website. We’ll publish what we legally can as soon as possible.
Settlement reached in Pedernales co-op lawsuit 3/11/08
PEC members will get refunds, but extent of reforms remains to be seen.
Pedernales financial information may remain hidden 1/13/08
Co-op members ‘fear a potential cover-up’ if lawsuit is settled and records are never released
Pedernales co-op lawsuit on hold for settlement talks 1/8/08
Negotiations follow disclosures about expenses, testimony.
Pedernales finally releases some detailed financial records 11/9/07
Judge orders Pedernales co-op lawyers to turn over documents 11/1/07
Judge agrees to keep some Pedernales documents secret 10/13/07
Lead firm leaves suit against Pedernales co-op 10/9/07
New class action lawsuit (PDF, 179k) (nearly identical to the ammended original) filed July 19th.
PEC issues a press release stating that the class action lawsuit has been dismissed – in our opinion, strictly a public relations move.
Original lawsuit dismissed due to a technical issue.
Ammended lawsuit (PDF, 176k)
Removes original complaintant and adds four new complaintants. Law firm Baker & McKenzie LLP joins suit.
PEC’s answer to the original lawsuit (PDF, 256k)
As expected in any such trial, the defendants deny any wrongdoing, call the validity of the lawsuit into question, and make a few accusations of their own.
Original lawsuit (PDF, 1.6mb)
Charges made against all current voting and advisory Board members and some top management of PEC as a class action on behalf of all members.