MARIETTA, Ga. (CN) – An electricity co-op wants to rehire its former CEO while he awaits trial on a 31-count RICO indictment. Cobb Electric Membership Corporation claims that nothing in its 2008 settlement of a civil complaint from discontented co-op members prevents it from rehiring Dwight Brown as its CEO, since Brown abided by the agreement and resigned on Feb. 28.
Brown retired in accord with the 2008 settlement with seven discontented co-op members whose original complaint led to Brown’s recent indictment.
But Cobb EMC has sued the “settling members,” claiming that it can rehire Brown immediately – and it plans to.
In its new complaint , Cobb EMC asks Cobb County Superior Court for declaratory judgment that it can rehire Brown without violating the 2008 settlement.
It’s another lob in a long legal game between the co-op and seven of its members. The members filed the first legal shot in 2007, accusing Cobb EMC and Brown of misappropriating the nonprofit’s assets for a for-profit subsidiary, Cobb Energy Management Corporation (Cobb Energy), and funneling millions of EMC member dividends into the pockets of Brown and other officers.
In a 2008 settlement agreement, the settlement plaintiffs demanded that Brown retire on Feb. 28, 2011 and that he “not seek an extension of his employment with Cobb EMC.”
Brown and Cobb EMC demanded that the settling plaintiffs agree to relinquish all claims against them now and in the future, and agree to “forever bar the prosecution, by Cobb EMC, or derivatively on behalf of Cobb EMC, of any duplicative included or related claims,” according to the settlement agreement.
But in January this year, Cobb County District Attorney Pat Head handed down the RICO indictment against Brown.
This incited the co-op to file a new complaint against the settling plaintiffs, accusing them of violating the original settlement terms by instigating the criminal investigation though the District Attorney’s office.
After Brown’s indictment, his defense team, led by former Gov. Roy Barnes, filed a motion in late January seeking dismissal of the criminal case against him, because the grand jury proceedings were not open to the public.
According to that motion: “The Grand Jury returned their indictment on the 6th Floor of the new Cobb County Courthouse. … At the time, the new building was not open to the public … with doors locked and/or armed guards stationed at the points of entry.”
The building was locked while court staff was moving into the new building.
Brown’s legal team claimed that that the closed grand jury proceedings violated a “steadfast rule in Georgia that valid indictments must be returned in open court.”
A pre-trial hearing on that motion is pending.
Cobb EMC’s board of directors dropped its complaint against the settling members last week, while simultaneously filing the latest lawsuit, seeking to rehire Brown as CEO.
In the new complaint, the electric co-op claims that once the original settlement was reached in 2008, the co-op hired a corporate headhunting firm to recruit a new CEO. The headhunter suggested eight candidates – four from outside the corporation, and four from within it.
On Feb. 22, Cobb EMC’s complaint continues, its board “unanimously agreed with the … conclusion that, after conducting a nationwide search and interviewing a number of qualified candidates, Mr. Brown is the most qualified candidate for the position President and CEO of Cobb EMC.”
One of the settling members’ attorneys, David Cohen, said in 2009 that his clients would “move to address [it] with the [C]ourt, if Cobb EMC’s Board appoints Mr. Brown president and CEO after the expiration of his current term,” the new complaint states.
“Mr. Cohen further stated that any such action by Cobb EMC would violate the court’s final order and judgment.”
Cobb EMC says it takes the settling members at their word, and believes they will sue the corporation if it rehires Brown.
But the co-op says that because Brown abided by the settlement agreement, retired as promised and did not pursue an extension of his employment, it can rehire him without violating the agreement.
“The Settlement Agreement instead restricts Mr. Brown by requiring him to announce his retirement on or before February 28, 2011, and to seek an extension of his employment. It does not restrict Mr. Brown from accepting such employment,” the complaint states.
Cobb EMC seeks an “expedited trial of this matter” so it can rehire Brown as soon as possible.
Cobb EMC sued Edgar “Bo” Pounds individually and on behalf of the estate of Mary Jean Pounds, Joseph Thompson, Franklin Smith, Eagle Eye Forensics, Dianne Brackin and William Sharp.
The co-op is represented by Dwight Davis with King & Spalding of Atlanta.
Dwight Brown is represented by The Barnes Law Group.