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Recherche, LLC v. Baldwin County Electric Membership Corp.

Supreme Court of Alabama

October 18, 2019

RECHERCHE, LLC, and Brooks Davis, individually and on behalf of all others similarly situated
v.
BALDWIN COUNTY ELECTRIC MEMBERSHIP CORPORATION.

Page 1042

         Appeal from Baldwin Circuit Court (CV-12-900820).

         Wilson F. Green and James E. Fleenor, Jr., of Fleenor & Green, LLP, Tuscaloosa; Brian. P. Strength and Joel Connally of Strength & Connally, LLC, Montgomery; Stephen D. Heninger of Heninger Garrison Davis LLC, Birmingham; Daniel G. McDowell of McDowell Beason & Hamilton P.C., Russellville, and David M. Cohen of Complex Law Group, LLC, Marietta, Georgia, for appellants.

          Daniel G. Blackburn of Blackburn & Conner, P.C., Bay Minette; Robert E. Poundstone IV and George R. Parker of Bradley Arant Boult Cummings LLP, Montgomery; and Marc James Ayers and J. Thomas Richie of Bradley Arant Boult Cummings LLP, Birmingham, for appellee.

          Dennis R. Bailey, Christopher S. Simmons, and J. Evans Bailey of Rushton Stakely Johnston & Garrett, P.A., Montgomery, for amicus curiae Alabama Rural Electric Association of Cooperatives, in support of the appellee.

          Ashton H. Ott and Edward M. Price, Jr., of Farmer, Price, Hornsby & Weatherford, L.L.P., Dothan, for amici curiae Pea River Electric Cooperative and Wiregrass Electric Cooperative, in support of the appellee.

         STEWART, Justice.

         This appeal involves the interpretation of the patronage-refund requirements imposed on electric cooperatives by § 37-6-20, Ala. Code 1975. Recherche, LLC, individually and on behalf of all other current and former members of Baldwin County Electric Membership Corporation ("the members"), filed a class-action complaint in the Baldwin Circuit Court ("the trial court") against Baldwin County Electric Membership Corporation ("Baldwin EMC"), seeking a judgment declaring the rights of the members to a return of "Patronage Capital" or "Capital Credits," which the members assert are "excess revenues" due to be distributed to the members under § 37-6-20. Brooks Davis subsequently filed a motion to intervene to represent all former members of Baldwin EMC. Recherche and Davis asserted that Baldwin EMC's method of allocating excess revenues to capital accounts violates § 37-6-20. The trial court dismissed the action, and Recherche and Davis appealed. We affirm.

         Facts and Procedural History

         The procedural history of the action underlying this appeal is lengthy; accordingly, we will discuss only those facts relevant to the issue of Baldwin EMC's distribution of excess revenues. Recherche, LLC, a domestic limited-liability company located in Baldwin County and a member of Baldwin EMC, initiated the underlying class action against Baldwin EMC in June 2012. In May 2014, Davis filed a motion to intervene, which the trial court initially denied. On September 21, 2015, after Davis had appealed that determination, this Court vacated the trial court's order denying intervention and ordered the trial court to allow Davis to intervene. (Case no. 1140057.) Thereafter, Davis filed a class-action complaint in intervention.[1] Baldwin EMC amended its answer numerous times and filed multiple dispositive motions that were denied throughout the course of the underlying proceedings.

         On May 3, 2018, Recherche and Davis filed a joint amended complaint to which they attached the Baldwin EMC bylaws. On June 7, 2018, Baldwin EMC filed a

Page 1043

motion to dismiss and a supporting brief in which it argued that its method of allocating capital credits to members' capital accounts as provided in its bylaws complied with § 37-6-20 and that the following federal precedent supported the dismissal of the class action: Davis v. Central Alabama Electric Cooperative, No. 15-0131-WS-C, 2015 WL 5285894, Sept. 8, 2015 (S.D. Ala. 2015)(not selected for publication in F.Supp.), Caver v. Central Alabama Electric Cooperative, No. 15-0129-WS-C, Sept. 8, 2015 (S.D. Ala. 2015)(not selected for publication in F.Supp.)("Caver I"), and Caver v. Central Alabama Electric Cooperative, 845 F.3d 1135, 1141 (11th Cir. 2017)("Caver II"). Baldwin EMC attached to its motion the Baldwin EMC bylaws and copies of the opinions issued in Davis, Caver I, and Caver II. On July 16, 2018, Recherche and Davis filed a response in opposition to Baldwin EMC's motion. On July 24, 2018, the trial court denied Baldwin EMC's motion to dismiss.

         On July 30, 2018, however, the trial court entered the following order withdrawing its July 24, 2018, order and granting Baldwin EMC's motion to dismiss:

"The MOTION TO DISMISS [RECHERCHE AND DAVIS'S] AMENDED COMPLAINT PURSUANT TO RULE 12(B)[, Ala. R. Civ. P.,] is hereby GRANTED based solely upon the Caver arguments asserted by [Baldwin EMC]. The opinion of the Eleventh Circuit Court of Appeals in Caver v. Central Alabama Electric Cooperative, 845 F.3d 1135 (11th Cir. 2017), upheld Rule 12 orders of dismissal by the United States District Court for the Southern District of Alabama. While that opinion is not binding precedent on this Court, it is the only appellate opinion to interpret the subject statute. The Court is convinced that, given the number of identical cases pending in Alabama state courts, the Alabama Supreme Court's consideration of the statute is necessary to ultimately resolve the issue of how electric cooperatives must distribute excess revenues under the controlling statute. [Recherche ...


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