Cherokee Electric accused of not refunding excess revenues

By Legal News Line | Apr 14, 2015

BIRMINGHAM, Ala. (Legal Newsline) - An Alabama electric company is being sued for allegedly failing to refund excess revenues to members as instructed under state law.

John Hollis Neyman filed the lawsuit against the Cherokee Electric Cooperative (CEC) on March 3 claiming the company has failed “decade after decade” to give its members a refund of excessive revenue. The suit was originally filed in Cherokee County Circuit Court but was removed to U.S. District Court for the Northern District of Alabama on April 8.

“Patronage Capital” or “Capital Credit” is governed under state law on how electric cooperatives should distribute excess revenue, the lawsuit said. Neyman, who is a member of the cooperative, claims state law is “grafted onto CEC's bylaws to the exclusion of any contradicting provisions," which means if a provision in the bylaws violates Alabama state law it would be void.

The state law defines what excess revenue means and lists several areas where revenues should be spent for electric cooperatives, the plaintiff says. It also states excess revenue can be given to members in the form of “general rate reductions,” or as prorated patronage refunds based on the amount paid by each respective member during that fiscal year, the suit says.

The lawsuit seeks class status for all CEC members and is looking to recover an unspecified amount of damages. Neyman is represented by Will J. Parks, III in Scottsboro, Ala.; Oscar M. Price, IV and Nicholas W. Armstrong of Price Armstrong, LLC in Birmingham, Ala.; and Luke Montgomery and J. Bradley Ponder of Montgomery and Ponder, LL in Birmingham.

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