LIVINGSTON - A group filed a class action lawsuit in Liberty County’s 253rd District Court against Sam Houston Electric Co-Operative, Inc. (SHECO), a nonprofit member owned electric co-op, its directors, advisory directors, advisory directors-at-large, and officers for failure to return profits to members of the electric membership corporation.
The SHECO members are represented by attorney Frederick L. McGuire in Liberty, Texas, as well as Husain and Associates.
According to the suit, SHECO’s primary obligation is to provide electricity at cost and operate as a non-profit. Any returns realized by SHECO are supposed to be returned to the members. Instead, SHECO has consistently refused to return its member any funds.
Under Texas law, according to the suit, electric cooperatives must operate on a non-profit basis. The lawsuit alleges SHECO charges its members more on their electric bills than it needs to operate. Additionally, the lawsuit claims SHECO receives ‘capital credits’ which are supposed to be passed on to SHECO members. These extra profits are supposed to be allocated periodically to each member based on their electrical usage. These individual shares are called “capital credits.”
According to documents the Polk County Enterprise has received from Holland & Knight Law, attorneys for SHECO, the defendant denies each allegation, stating that the petition fails to state a claim upon which relief may be granted. The document also states that injuries, damages, and claims of the plaintiff, if any, were caused, in whole or in part by the sole or contributory negligence of plaintiff.
“Sam Houston Electric Cooperative is fighting to protect its members. The allegations made against the cooperative in the recent lawsuit filed by Joe D. Berry, individually and for the benefit of the surviving heirs and children of Lester B. Berry, et al. v. Sam Houston Electric Cooperative, et al. are ‘frivolous,’ inappropriate, and are a ‘baseless litigation tactic,’ as said in a recent court filing by the Defendant.
“These allegations are brought by an individual who is not a member of Sam Houston EC, ‘to bring bad faith claims through an expensive and ultimately unfounded claim’ against the Cooperative and its members.”
According to the suit, in 2012, SHECO reported over $144 million Patronage Capital, over $153 million in 2013, and over $161 million in 2014.
The suit says, “On information and belief, SHECO has returned margins to the members only twice. Those returns represented two percent or less of the actual margins.”
The suit goes on to state that SHECO retained $156 million in 2011 and $176 million in 2014 in margins, which in fact was money that belonged to the members.
Additionally, the lawsuit alleges on Nov. 27, 2015, “SHECO shut off the power to Lester B. Berry’s home in Dayton, Texas, without proper notice, causing horrendous suffering to and ultimately the awful death of Lester Berry. SHECO took this drastic action over a bill for $130 that was one month past due.” Berry had been a longtime member of SHECO.
Holland & Knight Law state that the lawsuit will negatively impact all Sam Houston EC members, who now are forced to pay the cost of this litigation brought by Joe D. Berry and his attorneys. According to the law firm, none are actually members of the Cooperative.
According to the document, Sam Houston Electric Cooperative, on behalf of itself, its members, and its directors, vigorously denies each allegation stated in the recently filed lawsuit.
“At all times, Sam Houston EC has acted in accordance with the law, its bylaws, and its articles of incorporation. This applies to all aspects of the cooperative’s operations, including capital credits. As its members well know, Sam Houston EC has and continues to consistently retire capital credits. Only during times of severe weather events, such as hurricanes or major drought, has SHECO not retired capital credits, due to the extreme costs brought about by those weather events. In fact, cooperative members received $2.3 million in capital credits in September 2014, then another $3.16 million in 2015. And in September 2016, co-op members will receive another $3.08 million in capital credits.
“Sam Houston Electric Cooperative was created in 1939, by members and for members, and it has faithfully served those members for 77 years. This litigation is ‘baseless,’ and Sam Houston EC will protect and defend its members against all of the plaintiff’s allegations,” the statement added.