[Watchdogs] The Settlement, revisited

Sun Apr 12 21:09:02 CDT 2009

Merle:

Your message is very clear, very accurate and very kind.

Obviously, the lawyers and plaintiffs in the lawsuit want to be revered. 
They do deserve our appreciation for uncovering the mess at the PEC.  But 
after saddling us with such a repugnant settlement in order to collect their 
millions, they really ought to just take their money and slink away.

Carlos Higgins

----- Original Message ----- 
From: "Merle L. Moden" <mlmoden at texas-skies.com>
To: "Jan Soifer" <jsoifer at baronbudd.com>
Cc: <watchdogs at pec4u.org>
Sent: Sunday, April 12, 2009 12:19 PM
Subject: Re: [Watchdogs] pending legislation

Jan:

Thank you for your efforts to wrest control of the PEC from Bennie and
Bud, and for your explanations regarding contingency fee lawsuits. I
suspect that precious few Watchdogs are unaware of the use of
contingency fees in such lawsuits.

I take issue with your glossing-over of the fact that $1.6 million of
the fees paid to the plaintiffs and their attorneys will be paid through
higher electric rates for the "settlement class." That's the class -- 
all PEC members except the plaintiffs -- that was used as leverage by
the Judge Dietz and plaintiff's attorneys to extract a settlement from
the defendants at terms highly favorable to these defendants, and the
attorneys for the plaintiffs. We in the "settlement class" were served
up like a piece of meat. We received no representation from the
plaintiff's attorneys and no benefit from the settlement, unless you
consider having to pay $1.6 million to the plaintiffs and their
attorneys a benefit. Had the "settlement class" received some benefit,
any benefit, from the settlement, the $1.6 million wouldn't be such a
bitter pill.

Yes -- reforms were instituted during the pendency of this lawsuit, and
without the lawsuit they would not have been instituted. We had been
given back the ability to control our cooperative which was stolen from
us by the defendants in the lawsuit. They are not giving back any of the
money they plundered from PEC and members are proscribed by the terms of
the settlement from trying to recover their plunder.

So, please don't tell me we got a good deal, and the hardworking
plaintiffs' lawyers deserve their fees. The "settlement class" got a raw
deal because the plaintiffs' attorneys failed to provide effective
counsel to the "settlement class." The plaintiffs' attorneys acted only
for their self-interests and those of the plaintiffs. The "settlement
class" was convenient leverage to accomplish their self-serving
purposes. We in the "settlement class" were simply a means to an end.

Merle

Jan Soifer wrote:
>
> For those of you who don’t know me, I am the lawyer who tried to find
> out how much money Bennie Fuelberg was making as General Manager of
> the PEC, then asked the Attorney General to take over the
> investigation and enforce the law. After the Attorney General
> exercised his discretion not to investigate or take action, I worked
> with some other lawyers to continue the investigation, and then filed
> and pursued the class action lawsuit.
>
> I have read the pending bills and had planned to testify in the House
> committee last week, but had a conflict in the evening when the bills
> were finally heard. I have since called Representative Rose’s office
> to ask if there is anything I can do to assist him. * In a nutshell,
> it is my opinion that if the Rose/Frasier bills had been in effect,
> the fraud, waste, abuse and breaches of fiduciary duties that occurred
> at the PEC likely would not have occurred.* The same can not be said
> for the Swinford bill, as it unduly limits the members’ access to
> information and meetings, and those intent on taking advantage of the
> co-op could have used the cover of darkness allowed by that
> legislation to do so. The Rose/Frasier bills open electric co-ops to
> sunshine and empower co-op members to make sure their co-op’s
> management acts in their interest; the Swinford bill does not. Thus, I
> support the Rose/Frasier bills and oppose the Swinford bill.
>
> If PEC members had the right to attend Board meetings, had a fair
> chance to elect Board members they chose, and had access to complete
> information about the operation of their co-op, the management would
> not have been able to run amok, commit fraud and freely breach its
> fiduciary duties to the co-op and its members. *Had the rights granted
> by the Rose/Frasier bills been in effect, no class action lawsuit
> would have been necessary. *Those who oppose litigation, and class
> action litigation in particular, should favor the Rose/Frasier bills
> as a preventative measure to avoid the need for litigation.
>
> Some on this listserv have griped about the attorneys’ fees awarded in
> the class action settlement, and about the PEC’s having to pay part of
> the fees rather than AIG ’s paying all of them. Who paid the fees was
> between the PEC and its insurer; the lawyers for the class and the
> class representatives had no control over that. The Court had
> authority to award between ¼ and 4x the lawyers’ hourly fees under
> Texas ’ class action rules. The Court awarded less than double, but
> slightly more than single the amount of hourly fees. In fact, the
> lawyers and law firms representing co-op members worked without
> compensation or reimbursement of our expenses for more than two years,
> and without any assurance that we would ever receive compensation or
> reimbursement of our expenses. As it turned out, the lawyers have
> finally been paid for our work during the past few weeks, but not
> without significant sacrifice while we waited. The class
> representatives, who invested significant time and effort into
> pursuing the lawsuit, and who should be commended for sticking their
> necks out and putting in the time, have also finally been paid the
> amounts ordered by the Court to compensate them for their efforts.
>
> The reason for the legal fee award and the award to the class
> representatives is pretty straight-forward: the lawsuit was successful
> in achieving almost all of the remedies that were requested, and thus
> the lawyers and class representatives deserved to be paid for their
> successful work. With the benefit of hindsight, I can say that I do
> not believe that I would have settled the lawsuit on the terms reached
> and approved by the Court had I been involved in the settlement
> negotiations (other firms had taken over the lead counsel role by the
> time of the settlement negotiations), and I know that the class
> representatives struggled with the terms as well, but there can be no
> question but that the lawyers and class representatives earned the
> fees the Court approved; the PEC’s reforms are a direct result of the
> lawsuit. The pec4u group’s agitation around the problems at the PEC,
> as important as it was, was not given media attention until after the
> lawsuit was filed.
>
> Clearly the lawsuit was assisted greatly by the relentless work of the
> pec4u group, the media’s persistent coverage of the lawsuit and the
> information discovered in litigation (particularly the outstanding
> investigative reporting of Claudia Grisales and editorial writing of
> Bruce Hight of the Austin American Statesman) and the good work that
> Representative Rose and Senator Frasier did after learning of the
> lawsuit and the issues in the media. The lawyers worked for six months
> to a year or longer, some of us on a full-time basis, paying employees
> and funding overhead, without being paid for our work or reimbursed
> for our expenses until more than two years after we started our work.
> I commend the pec4u group and watchdogs, the media, Rep. Rose and Sen.
> Frasier for their help, but what was different this time from other
> attempts to curb the abuses at the PEC was the lawsuit. While the
> effort of all contributed to the result, the filing and pursuit of the
> lawsuit was the impetus for the revolutionary reforms at the PEC.
>
> * If the ** Texas ** legislature wants to avoid a repetition of the
> problems at the PEC, and avoid the need for additional class action
> litigation, it should pass the Rose/Frasier legislation. * If PEC
> members are not satisfied with the progress of reform at the PEC, they
> have the tools to achieve change: they can and should continue to
> closely watch the actions of the PEC Board and management and elect
> new Board members to replace those whose actions are not acceptable.
>
> ** Jan Soifer **
>
> ** Baron & Budd **** , P.C. **
> ** 701 Brazos St., Suite 650 **
> ** Austin, Texas 78701 **
> ** (512) 583-0451 (direct phone) **
> ** (512) 657-0556 (mobile phone) **
> ** (512) 852-5922 (fax) **
> ** jsoifer at baronbudd.com ** <mailto:jsoifer at baronbudd.com>** **
> ** www.baronbudd.com ** <http://www.baronbudd.com>
>
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