A new class action lawsuit was filed on behalf of deceased members of South River Electric Membership Corporation, based in Dunn, N.C. The complaint centers around the electric cooperative’s practice of discounting the capital credits of estates to present value, a common practice by many cooperatives. The plaintiffs allege that the discounting plan results in a conversion (i.e., taking) of a portion the estates’ capital credits. They allege that the discount is improperly transferred into the cooperative’s permanent equity.
The complaint seeks an order declaring that the cooperative’s bylaws are unlawful , that the cooperative must discontinue the discounting program, and that the cooperative should distribute the account values without applying a discount. It also asserts claims of breach of fiduciary duty, conversion, unjust enrichment, ultra vires, intra vires, unfair or deceptive trade practices, and breach of contract.
The complaint against South River EMC echoes arguments and allegations of complaints filed against electric cooperatives in other states. It asserts that the deceased members are locked into perpetual investments without any expectation of return. The plaintiffs allege that the discounting program equates to an “involuntary contribution to [the EMC’s] permanent equity.” Similar to another capital credits lawsuit, the complaint alleges that the practice of discounting capital credits to present value is improper.
Read more about the lawsuit here. We will post more about the lawsuit as it develops.
View other posts about capital credits litigation.