Saturday, July 10, 2010
Socorro Co-Op Sues Members
By T.S. Last
El Defensor Chieftain
SOCORRO — Taking what appears to be unprecedented legal action, the Socorro Electric Cooperative has filed a lawsuit against the more than 10,000 people who own it including a fair number of local judges.
The utility filed a complaint this week challenging the validity of three bylaws overwhelmingly adopted by member-owners in April that call for increased transparency of a board that for the past two years has been under scrutiny from members and the media for its spending practices and how it conducts business.
Like all rural electric cooperatives, the Socorro utility is a nonprofit corporation, and any profits it earns are distributed to member-owners in the form of capital credits.
Named as defendants are all unnamed member-owners of Socorro Electric Cooperative, totaling more than 10,000 members; Charlene West of Lemitar, who helped lead a successful movement to reform the co-op; and the Mountain Mail and El Defensor Chieftain, two Socorro-based newspapers.
"We don't like to hear people say we're 'suing' the members, but if you're going to challenge something in court there has to be a plaintiff and there has to be defendants," said Paul Bustamante, the co-op's president.
The complaint asks that the judge declare the bylaws null and void, and the co-op be awarded costs and reasonable attorney's fees for bringing the lawsuit.
The approved bylaws in question:
• Call for the board to voluntarily follow the Open Meetings Act and Inspection of Public Records Act.
• Allow members access to co-op books, records and audits, with the exception of records protected by the Privacy Act.
• Allow member-owners and the media to attend co-op board meetings and that a portion of the meeting be set aside for public comment.
In addition, announcements of meetings are to be made in billing statements and advertised in local newspapers
The board of trustees voted unanimously to contest the bylaws at its May meeting, following the advice of the co-op's attorney, Dennis Francish.
He argues there are problems with the bylaws that make them impossible to implement. He said rural electric cooperatives are private, nonprofit corporations not subject to laws that pertain to public entities.
"All we want to do is challenge those three bylaw changes as being unworkable and unreasonable, and beyond the scope of representative government," he said. "That's why you have board members at the exclusion of everyone else. Attempting to go beyond that is an attempt to go beyond the scope of corporate law."
Francish said the complaint was filed in state District Court in Los Lunas because all judges in the 7th Judicial District are defendants in the case.
He said 13th Judicial District Judge John W. Pope signed an order allowing publication of the notice in the newspapers to serve as the summons for the more than 10,000 members.
Francish told El Defensor Chieftain that the newspapers were named as defendants, "because it's my belief that the press ought not to be at a business meeting, and we're going to test that in court. You're the only press in the state that attends those meetings, unless I'm wrong."
The attorney said Charlene West was named specifically as a defendant because she has been disruptive at past meetings.
"We've had some problems with her, and we want to make sure we bring that to the attention of the court," Francish said.
West said she's been singled out because she was successful in leading the reform movement and a vindictive board is out to get her.
"They're on a witch hunt, and I'm the witch," she said. "I feel like I'm being made a martyr, because I'm just a working Joe, and people know me and people identify with me. They're going to prosecute me and persecute me, and try to break me."
She said she doesn't have money to hire a lawyer.
"If they come after me monetarily, they're going to kill me."
West chairs the SEC Reform Committee, established almost two years ago when it came to light that expenses incurred by the Socorro cooperative's board of trustees, by comparison, far exceeded those of the other 15 electric cooperatives in New Mexico.
In 2009, the 11-member board's expenses — including travel, lodging, per diem, fees and health benefits — totaled more than $492,000, an average of almost $45,000 per trustee.
The movement gained steam in the fall when three long-standing incumbents were voted out at district elections in Socorro and a bevy of reform-related resolutions won approval, which brought them to a vote at the annual meeting.
All of the measures passed by overwhelming margins April 17 and marked a clear victory for the reform movement.
Among the changes:
• Reducing the size of the board from 11 to five members.
• Putting a cap on trustees' expenses.
• Limiting trustees to serving no more than two consecutive two-year terms.
• Realigning districts to make for more equitable representation.
• Allowing mail-in voting.
The co-op board is disputing only the changes that address transparency.
West finds it hard to believe a democratically controlled electric utility owned by its members could be kept in the dark about how its interests are managed.
"It's pretty scary that this can happen in the United States, just because we're asking questions," she said. "I haven't done anything that's illegal; I've just asked questions."
Conflicts of interest
Reform trustee Charlie Wagner blamed the board and the attorney it hired in December for making a mess.
"All along I've known that Mr. Francish was hired by the board to represent the majority of the board's interests," Wagner said. "He represents seven (board members), and he works against the interests of the membership and the interests of the co-op itself. They've gotten somebody to help them weaken member control, and the best way to do that is to deprive the members of information and keep everything secret."
Retreating into executive session has been a common practice of the board over the years.
The lawsuit by Francish says applying the state's sunshine laws would be a hardship, and allowing members to attend meetings would "adversely impact the ability of the Board to conduct business."