DANIEL CLIFTON • EDITOR
JOHNSON CITY — Pedernales Electric Cooperative officials say changes to how members elect directors was within the purview of the board’s powers, but a lawsuit contends the co-op violated its bylaws as well as state law by enacting a new election system.
Two directors, Cristi Clement and Kathryn Scanlon, along with PEC member Thomas Mitchell filed a lawsuit in Hays County on Dec. 29 challenging an August 2016 vote by the board of directors that changed the election system from at-large to single-member district voting.
“This legal action was taken on behalf of concerned PEC members/owners whose voting rights were critically diminished by a majority of PEC board of directors during an August 2016 meeting,” Clement said. “Today, the majority of PEC members are ineligible to vote in the upcoming 2017 (board of directors) election. Only members from districts 2 and 3 will be allowed to vote.”
The lawsuit names PEC as well as the five directors who voted to amend the bylaws to allow for single-member voting. Those directors are Amy Lea S.J. Akers, James Oakley, James Powers, Emily Pataki, and Paul Graf.
“The majority of the board has attempted to disenfranchise the vast majority of the (PEC) members by voting to change the election process to (members) voting for directors by districts,” said attorney Buck Wood, who represents Scanlon, Clement, and Mitchell in the lawsuit. “The (PEC) charter says all the members of the co-op get to vote for the directors.”
In August, the directors voted 5-2 to amend the bylaws, changing the way PEC members elected directors. Previously, members voted under an at-large system in which members could cast a ballot for every board of directors seat up for election.
On Aug. 15, 2016, the board voted to change from at-large to district elections. Under this methodology, only members within a respective PEC district could vote for the director of that particular district.
PEC officials said the change was “lawful and appropriate for the cooperative.”
“Due to the geographical size of PEC and our large membership, we believe having a district representation is beneficial to our members,” said PEC board president Emily Pataki in a written statement. “We also believe that increasing the focus on our districts allows for better member communication, representation, and interaction.”
Wood isn’t so sure about those motives. It might, he said, simply come down to power and staying on the board.
“It’s all about control,” he said. “I think some of the directors feel that they may not get elected if the entire (PEC) membership votes on them.”
Wood pointed out that by going to single-member district elections, the directors cut the number of people who can vote on them individually by six-sevenths.
The move, Clement said, limits members’ democratic control over the board of directors. She pointed out that under the previous at-large system, “PEC members vote for and hold all seven directors accountable. Members are fully empowered and can exert a strong democratic control of their member-owned co-op.”
The move by the five board of directors to go to a single-member election process, Clement said, usurps some of that member power.
“PEC members can vote for one director every three years and only have diminished control of the board,” she added.
Directors are elected for three-year terms, but the elections occur in a staggered manner so only one or two of the seats are up for vote at one time.
The August 2016 vote also counters what PEC members themselves have wanted when it comes to director elections.
In 2014, PEC members voted to keep the director election methodology as at-large by a 9,219-to-7,957 margin. In 2011, the members voted to keep the at-large system over both a single-member system and a hybrid system that was defined as a “combination of an at-large system and a single-member system.” The board of directors, however, is not bound to follow the referendum outcomes.
While the August 2016 action by the directors might be counter to what PEC members voted, it’s also against state law and the PEC articles of incorporation, according to Wood.
And that’s the real crux of the lawsuit, he said.
“When you look at this, it’s really straightforward,” Wood said. “The state law is very clear on this matter. In order to (change the election process), they’re going to have to get the law changed first and then the articles of incorporation.”
Something, Wood said, the directors did not do before voting on the election process change last year.
The lawsuit also states that the five directors changed the quorum requirements for membership business. Under the PEC articles of incorporation, “a quorum of members for the transaction of business at all meetings of the members is five thousand members present in person or casting a vote electronically, by mail or on their own behalf by any other method approved by the board.”
The amended bylaws keeps that 5,000-member requirement but adds a “director election quorum” stating “a quorum of members for a director election is at least one thousand votes cast in each individual district if the vote being taken regards the election of the director of that district by members of that district.”
According to the lawsuit, “the defendant directors have exceeded their power and authority by amending the PEC’s bylaws to provide for single-member district director elections and to lower the quorum requirement for director elections,” and the defendants are asking the court to block the changes.
PEC officials stated the board is “ready to defend the new voting system and respond to the lawsuit.”