IN THE CIRCUIT COURT OF MARENGO COUNTY, ALABAMA NOTICE OF CLASS ACTION AND SETTLEMENT

Transcription

1 IN THE CIRCUIT COURT OF MARENGO COUNTY, ALABAMA CHARLES GLASS, and ) RONNIE JENNINGS, ) Plaintiffs, ) v. ) CV BLACK WARRIOR ELECTRIC ) MEMBERSHIP CORPORATION, ) Defendant. ) NOTICE OF CLASS ACTION AND SETTLEMENT TO: All individuals, firms, partnerships, associations, corporations, or entities which are, or at any time were, members of Black Warrior Electric Membership Corporation ( Black Warrior ). This Notice is given to inform potential Class Members of a proposed class action settlement of the abovestyled lawsuit (the Action ). If you are now, or have at any time been, a member of Black Warrior Electric Membership Corporation ( Black Warrior ), you may be a Class Member and your rights may be affected. This Notice is not an expression of any opinion by the Court of the merits of the claims or defenses in the case or in the ultimate fairness of the settlement. PLEASE READ THIS NOTICE CAREFULLY AND IN ITS ENTIRETY. THIS IS NOT A NOTICE OF A LAWSUIT AGAINST YOU. YOU MAY BE ENTITLED TO CERTAIN BENEFITS. If you are a present or former member of Black Warrior described above, and you do not file a timely request to be excluded from participation in the proposed settlement ( Exclusion Request ), and the Court grants final approval of the proposed settlement, you then will be deemed a Settlement Class Member. If the Settlement Agreement (the Agreement ) becomes effective, Settlement Class Members who provide certain information on a Claim Form will be entitled to receive cash payments as part of the proposed Settlement, as described more fully below. If the Agreement becomes effective, Settlement Class Members will be bound by the release of certain claims (explained more fully below), whether or not they submit a Claim Form. If you file an Exclusion Request in a timely manner, the terms of the Agreement, including the release of claims, will not bind you, but you will not receive any benefits under it. If you are a Class Member and the Court approves the Agreement, you will be entitled to participate, and you will be bound by the Agreement, unless you choose to file a timely request to be excluded from participation. I. FAIRNESS HEARING Notice is hereby given that a hearing will be held on July 30, 2015 at 1:00 p.m., before the Honorable Eddie Hardaway of the Circuit Court of Marengo County, Alabama (the Court ), located in Linden, Alabama. The purpose of the hearing ( Fairness Hearing ) will be to determine: (i) whether the proposed settlement of claims against Black Warrior as set forth in the Agreement is fair, reasonable, adequate and in the best interests of the Settlement Class Members; and (ii) whether a Judgment should be entered approving the Agreement and dismissing the Action. This Notice contains a summary of the terms of the Agreement between the Class Representatives and Black Warrior. All terms not defined in this Notice will have the meaning given to them in the Agreement. For a more detailed statement of the matters involved in this lawsuit and the Agreement, you are referred to the sources listed in Section VII of this Notice. Page 1 of 8

2 II. CLASS CERTIFICATION DETERMINATION The Court has entered an order, for purposes of settlement only, preliminarily certifying two Settlement Classes. The Present Member Class is defined as: all individuals, firms, partnerships, associations, corporations, or entities which were at any time a member of Black Warrior, and who are members of Black Warrior as of the date of the Final Order and Judgment. Excluded from the Present Member Class are: (a) persons who timely and properly exclude themselves from the Settlement Class as provided in this Agreement; (b) persons who, as of the date of entry of the Final Order and Judgment, have executed an individual release of all claims within the scope of the Release proposed by this Agreement; and (c) all Alabama state judges, their spouses, and persons within the third degree of relationship to them. The Former Member Class is defined as: all individuals, firms, partnerships, associations, corporations, or entities which were at any time a member of Black Warrior, but which are no longer members of Black Warrior as of the date of the Final Order and Judgment. Excluded from the Former Member Class are: (a) persons who timely and properly exclude themselves from the Settlement Class as provided in this Agreement; (b) persons who, as of the date of entry of the Final Order and Judgment, have executed an individual release of all claims within the scope of the Release proposed by this Agreement; and (c) all Alabama state judges, their spouses, and persons within the third degree of relationship to them. If you fall into either the Present Member Class or the Former Member Class, you are a Settlement Class Member, all of which are referred to as Settlement Class Members. Together, the Present Member Class and the Former Member Class are the Classes. In its preliminary approval order, the Court named Plaintiff Charles Glass as the representative of the Present Member Class, and Plaintiff Ronnie Jennings as the representative of the Former Member Class (together, they are the Class Representatives or Named Plaintiffs ). The Court has also named the following attorneys as Counsel for the Settlement Classes (1) for the Former Member Class, John Gibbs, Gibbs & Sellers, P.C., 108 North Walnut Street, Demopolis, AL 36732; and (2) for the Present Member Class, Brian P. Strength and Joel Connally, Strength & Connally, LLC, 402 North Main Street, Tuskegee, AL 36083, and James E. Fleenor, Jr. and Wilson F. Green, Fleenor & Green LLP, 204 Marina Drive, Ste. 200, Tuscaloosa, AL Together, these counsel are referred to as Named Plaintiffs Counsel. The Court has not ruled on the merits of the claims against Black Warrior or Black Warrior s defenses to those claims. Black Warrior has vigorously denied and continues to deny any wrongdoing. III. BACKGROUND OF CLAIMS AND RESPECTIVE VIEWS OF LITIGATION Black Warrior provides electrical service to residents and businesses in certain Alabama counties. Black Warrior is an electric membership cooperative, the activities of which are governed by certain Alabama statutes, including Ala. Code The Named Plaintiffs allege in the Lawsuit, among other things, that Black Warrior has violated section by failing to distribute excess revenues in the manner provided in the statute. Black Warrior has vigorously denied and continues to deny all liability with respect to any and all facts or claims alleged in the Action. Black Warrior contends that its business practices are both authorized by the statute and benefit its present and past members. For example, Black Warrior alleges that the patronage capital or capital credits held on its books and credited to the present and former members, such as the Named Plaintiffs, are in fact capital withholdings specifically authorized by Ala. Code , and therefore is not properly characterized as excess revenues under the statute, because those monies have been used to reduce or eliminate Black Warrior s capital indebtedness and/or have been used to finance ongoing and past capital projects, such as power generation and distribution equipment and material. Black Warrior also contends that it has, in fact, distributed its excess revenues to its current and former members through general rate reductions, because its rates are consistently among the lowest of comparable cooperatives in Alabama. Page 2 of 8

3 Substantial arm s length settlement negotiations have taken place among Named Plaintiffs Counsel and counsel for Black Warrior. These negotiations, during which all parties vigorously maintained their respective positions on the merits of the suit, resulted in the Agreement. Named Plaintiffs and Named Plaintiffs Counsel have concluded that the proposed settlement is fair, reasonable and adequate, and that it is in the best interests of the Class Members. Black Warrior has concluded that, while it continues to deny all liability of any kind, it is desirable to enter into the Agreement in order to settle the claims at issue and to avoid potential risk and further costs and delays, including the costs of litigation and attorneys fees. IV. DESCRIPTION OF THE PROPOSED SETTLEMENT The complete terms and conditions of the proposed settlement are contained in the Agreement. The parties obligations under the Agreement do not become effective until final judicial approval, including the exhaustion of any appeals (the Final Settlement Date ). Black Warrior has agreed to incur and bear certain reasonable costs involved in implementing the Agreement, including the costs of distributing this Notice to Class Members. (a) Black Warrior s Obligations Under the Settlement Agreement Subject to the limitations described below and explained further in the Agreement, Black Warrior shall make available to all Settlement Class Members a settlement fund (the Gross Settlement Fund ) of $10,500,000, from which will be paid (a) any attorneys fees and expenses awarded by the Court to Named Plaintiffs Counsel ( Attorneys Fees and Expenses ), and (b) Benefits to Settlement Class Members who file Valid Claims (as defined in the Agreement). For any Class Member, the Benefit shall be calculated pursuant to the following formula: [(a) + (b)] x (multiplied by) (d) (c) where: (a) is the amount of the Class Member s assigned patronage capital or capital credits showing on the books of Black Warrior, as of December 31, 2014; (b) equals $10 per year for each year, or any portion thereof, prior to 1975 in which the Class Member was a member of Black Warrior; (c) is the aggregate amount of all patronage capital or capital credits showing on the books of Black Warrior, as of the date of the Final Order and Judgment; and (d) is the Net Settlement Fund (which is the Gross Settlement Fund, less Attorneys Fees and Expenses). Furthermore, immediately upon the payment of Benefits to Settlement Class Members, all Remaining Patronage for all Settlement Class Members shall be converted on Black Warrior s books to Member Equity. In addition, Patronage Capital Credits for calendar year 2015 and for each year thereafter shall be assigned to the members and retired as provided in this paragraph, subject to any different instructions hereafter issued by the Marengo County Circuit Court. The annual audit for Black Warrior has historically been completed and approved by the Board of Directors of Black Warrior at a regularly scheduled Board meeting before the annual meeting of members. Within a reasonable period of time not to exceed ninety (90) days after the approval of the annual audit, the Board shall determine the Patronage Capital Credits for the prior calendar year and assign same to the members. In addition, the Board shall determine the funds available to address the following, to-wit: (a) funds necessary to finance or make any and all necessary capital improvements; (b) funds necessary to establish and maintain reasonable reserves for extraordinary operational expenses, emergencies, and storm damage; and/or (c) funds necessary for reasonable operating expenses of Black Warrior for the upcoming year. The Board shall continue to take into consideration the historical practice of the Board of maintaining low rates for electricity consumed by its members, and the historical aversion of the Board to incur debt. The sum total of funds required for (a), (b), and (c), set out above, shall herein be defined as necessary operating reserves. The Board shall then determine the funds available for retirement of Patronage Capital Credits in excess of the necessary operating reserves, as defined above. The Board shall give full consideration to the ratio set out and established in paragraph of the Agreement, as said Page 3 of 8

4 ratio was based on an analysis of the seventy-five year history of Black Warrior and the actual funds available in excess of necessary operating reserves during that time. The Board shall then authorize retirement of Patronage Capital Credits by payment to members of the amount determined as available for payment pursuant to the provisions of this paragraph. If adequate funds are not available in any given year to retire Patronage Capital Credits using the ratio as set out in paragraph of the Agreement, the shortfall amount shall be recorded and carried forward to subsequent year(s) when adequate funds are available, as determined by the Board. The retirement or payment of said member s pro-rata Capital Credits shall be completed during the fourth quarter of each year of assignment of Patronage Capital Credits. The remaining Patronage Capital Credits which are not scheduled for present or future retirement payment shall be converted to member equity by the Board of Directors of Black Warrior. Black Warrior will also pay for all Costs of Administration and the Incentive Awards to the Named Plaintiffs, described below. (b) Settlement Class Members Obligation to Submit Claim Form for Cash Benefit A Member of the Settlement Classes wishing to receive a cash payment must complete the enclosed Claim Form (which is also at and return it to the Settlement Administrator at the following address: Black Warrior Electric Settlement Administrator Post Office Box 487 Birmingham, Alabama All Claim Forms must be received by the Settlement Administrator no later than November 10, (c) Named Plaintiffs Payment The Agreement provides that the Named Plaintiffs, Charles Glass and Ronnie Jennings, will seek, and Black Warrior will not oppose, an Incentive Award of $5,000 (or such other lower amount as awarded by the Court), payable by Black Warrior. The Agreement provides that the Settlement is not conditioned on the award of any particular amount of incentive payment to the Named Plaintiff. (d) Attorney s Fees Named Plaintiffs Counsel have agreed that they will apply to the Court for an award of Attorneys Fees and Expenses for Named Plaintiff s Counsel, in an amount that will not exceed $2.5 million, to be paid from the Gross Settlement Fund. Black Warrior has agreed not to oppose any motion by Named Plaintiff s Counsel for an award of attorney s fees, costs, and expenses in this amount. Any such award is subject to approval by the Court. However, the Agreement provides that the Settlement is not conditioned on the award of any particular amount of attorney s fees and expenses, which will be awarded and set by the Court. V. FINAL JUDGMENT AND RELEASES (a) Preliminary Approval of Proposed Settlement On June 9, 2015, the Court gave its preliminary approval of the Agreement, finding that its terms are within the range of reasonableness such that notice should be given to Class Members. (b) Entry of Final Judgment If the Court grants final approval of the proposed settlement as set forth in the Agreement (including any modifications of amendments agreed to by Named Plaintiff and Defendant), it will enter a Final Judgment, which will provide for and address, among other things, the following: Page 4 of 8

5 (i) (ii) (iii) (iv) (v) (vi) final approval of the Agreement and a finding by the Court that the terms and conditions of the Agreement are fair, reasonable, adequate and in the best interests of the Classes; a finding that the notice given to Settlement Class Members of the proposed settlement was the best notice practicable under the circumstances; an award of Attorneys Fees and Expenses to Named Plaintiffs Counsel in an amount the Court determines to be reasonable, subject to the limitations above; the full release of the Released Claims belonging to Settlement Class Members, as set forth in the Agreement; a dismissal on the merits, and with prejudice to refiling, of the Claims belonging to the Settlement Class Members against Black Warrior in the Action; a reservation of exclusive jurisdiction by the Court as to all matters related to the administration of the settlement and the Agreement. (c) Release of Claims Belonging to Settlement Class Members In consideration for the agreement by Black Warrior to provide the Class Benefits, Named Plaintiffs and all Settlement Class Members, whether or not filing a Claim Form or receiving a cash Benefit, will be deemed to release the following claims ( Released Claims ) as to the Released Parties (a term defined in the Agreement, which includes Black Warrior): In consideration for the Settlement benefits described in this Agreement, the Named Plaintiffs and the other members of the Settlement Classes who do not timely and validly exclude themselves in accordance with the procedures set forth in the Class Notice, on behalf of themselves and on behalf their heirs, guardians, assigns, executors, administrators, predecessors, and/or successors, will, by virtue of this Agreement and by virtue of the Court s order of final approval, be deemed to have fully, finally and forever released, remised, relinquished, acquitted, and forever discharged each and all of the Released Parties of and from any and all known and unknown past, present or future claims, actions, causes of action, suits, liabilities, demands, rights, debts, damages, judgments or avenues of relief of whatever kind, type or nature whatsoever arising in whole or in part from, or in any way whatsoever relating to, the facts or occurrences alleged in the Complaint, whether arising at law, in equity, or by regulation; and whether or not previously asserted; and whether assertable in the form of a cause of action or as a private motion, petition for relief or claim for contempt, or otherwise, in any court, tribunal, arbitration panel, commission, agency, or before any governmental and/or administrative body, or any other adjudicatory body; and whether past, present or future, mature or not yet mature, known or unknown, suspected or unsuspected, contingent or non-contingent; and whether based on federal, state or local law, statute, ordinance, regulation, code, contract, common law, or any other source. VI. FAIRNESS HEARING AND CLASS MEMBERS OPTIONS AS TO SETTLEMENT The purpose of the Fairness Hearing to be held on July 30, 2015 is to determine (i) whether the Court should certify the classes for settlement purposes; (ii) whether the Court should find that the proposed settlement with Black Warrior on the terms set forth in the Agreement is fair, reasonable, adequate and in the best interests of the Settlement Class Members, and whether it should be finally approved by the Court; and (iii) whether the Court should enter a Judgment approving the Agreement and dismissing the pending claims against Black Warrior with prejudice to refilling. The Fairness Hearing may be adjourned from time to time by the Court, without further notice. (a) Participation in the Settlement as a Settlement Class Member If you are a Settlement Class Member and do nothing at this time, then you will be treated as a Settlement Class Member, whether or not you submit a Claim Form. If the Court approves the proposed settlement, Settlement Page 5 of 8

6 Class Members who submit a timely and valid Claim Form will be entitled to receive cash Benefits. In addition, any Released Claims that Settlement Class Members have against Black Warrior will be resolved by the Settlement, whether or not any particular Settlement Class Member submits a Claim Form. Accordingly, if you are a Settlement Class Member and the settlement is approved, then you will have the rights and responsibilities that result from the Court s Final Judgment. (b) Exclusion Requests A Settlement Class Member may elect to be excluded from the settlement. Any Settlement Class Member who elects to be excluded will not share in any Class Benefits or otherwise participate in the Settlement, but he or she will not be barred by the Final Judgment from pursuing individual claims against Defendant in a separate lawsuit. If you are a Settlement Class Member and you want to be excluded from the Settlement, you must expressly state your request in a written Exclusion Request. You must send your Exclusion Request to Black Warrior Settlement Administrator, Post Office Box 487, Birmingham, Alabama by July 15, 2015, and if sent by United States Postal Service, it must be postmarked by that date. In order to be valid, the letter requesting exclusion must contain certain information. It must: (a) contain a caption or title that identifies it as Request for Exclusion in Glass & Jennings v. Black Warrior Electric Membership Corporation, CV ; (b) include the Settlement Class Member s name and address, and state whether the Settlement Class Member is a member of the Present Member Class or the Former Member Class; (c) specify the address for service at which Black Warrior provided electrical service to the Settlement Class Member; (d) specify that he or she wants to be excluded from the Present Member Class or Former Member Class (whichever is applicable); and (e) be personally signed by the Settlement Class Member. If an Exclusion Request does not include all the foregoing information or if it is not timely submitted, then it shall be deemed invalid. A Settlement Class Member submitting an invalid Exclusion Request shall be treated as if he or she did not submit any Exclusion Request at all, and shall be deemed to be a Settlement Class Member if the Court finally certifies a class and approves the Agreement. No person other than the Settlement Class Member may request exclusion on behalf of that Settlement Class Member. (c) Right to Appear at Fairness Hearing Any Settlement Class Member that is, a Class Member who has not filed a timely Exclusion Request may appear at the Fairness Hearing and, in person or through counsel of his or her choice, object to certification of the Classes; the fairness, reasonableness or adequacy of the settlement; the payment of attorneys fees, costs and expenses; and/or entry of the Final Judgment. If you are a Settlement Class Member and you want to appear at the Fairness Hearing, you must file a written Statement of Appearance with the Court at the following address: Hon. Kenny Freeman Clerk, Circuit Court of Marengo County, Alabama P.O. Box Linden, AL and also send a copy of the Statement of Appearance by hand-delivery, by first-class mail, or by electronic mail to both of the following attorneys: For the Present Member Class: For the Former Member Class: Wilson F. Green John Gibbs Fleenor & Green LLP Gibbs & Sellers, P.C. 204 Marina Drive Ste North Walnut Street Tuscaloosa, Alabama Demopolis, Alabama wgreen@fleenorgreen.com jgibbs@gibbsandsellers.com Page 6 of 8

7 For Black Warrior: Woodford W. Dinning, Jr. Lloyd & Dinning LLC 501 North Walnut Avenue Demopolis, Alabama Your Statement of Appearance, should you choose the option of submitting one, should be filed and served no later than July 15, 2015, which is fifteen (15) days prior to the Fairness Hearing. You may write your own Statement of Appearance containing the following information. Any Statement of Appearance should contain: (a) a caption or title that identifies it as Statement of Appearance in Glass & Jennings v. Black Warrior Electric Membership Corporation, CV ; (b) set forth the specific reason(s), if any, for your appearance, including all legal support you wish to bring to the Court s attention and all factual evidence you wish to introduce in support of your position; (c) include your name and address; (d) specify the address for service at which Black Warrior provided electrical service to you; and (e) be personally signed by you. (d) Written Objections Instead of appearing at the Fairness Hearing, a Settlement Class Member may object in writing to certification of the class action; the fairness, reasonableness or adequacy of the Settlement; the payment of attorneys fees, costs and expenses; and/or entry of Final Judgment. If you are a Class Member and you want to present written objections for consideration by the Court, you must file a written Statement of Objections with the Court at the following address: Hon. Kenny Freeman Clerk, Circuit Court of Marengo County, Alabama P.O. Box Linden, AL and also send a copy of the Statement of Objections by hand-delivery, by first-class mail, or by electronic mail to each of the following attorneys: For the Present Member Class: For the Former Member Class: Wilson F. Green John Gibbs Fleenor & Green LLP Gibbs & Sellers, P.C. 204 Marina Drive Ste North Walnut Street Tuscaloosa, Alabama Demopolis, Alabama wgreen@fleenorgreen.com jgibbs@gibbsandsellers.com For Black Warrior: Woodford W. Dinning, Jr. Lloyd & Dinning LLC 501 North Walnut Avenue Demopolis, Alabama wwdjr@ldllc.com You may write your own Statement of Objections containing the information outlined below, or you may do it through your own attorney. Your Statement of Objections must be filed and served no later than July 15, 2015, which is fifteen (15) days prior to the Fairness Hearing. Any Settlement Class Member who does not file and serve a written objection as described in this Notice shall be barred from objecting to or seeking review of the Settlement. Page 7 of 8

8 The Statement of Objections should contain the following information: (a) contain a caption or title that identifies it as Objection to Class Settlement in Glass & Jennings v. Black Warrior Electric Membership Corporation, CV ; (b) set forth the specific reason(s), if any, for each objection, including all legal support you wish to bring to the Court s attention and all factual evidence you wish to introduce in support of the objection; (c) include your name and address; (d) specify the address for service at which Black Warrior provided electrical service to you; and (e) be personally signed by you. VII. EXAMINATION OF SETTLEMENT AGREEMENT AND INQUIRIES BY CLASS MEMBERS The above is only a summary of the terms of settlement. You may obtain a copy of the Settlement Agreement and further information concerning the settlement, the Fairness Hearing, and Class Benefits by either logging onto by calling , or by sending a written request to Black Warrior Settlement Administrator, Post Office Box 487, Birmingham, Alabama All questions relating to the proposed Settlement should be directed to Named Plaintiffs Counsel. If you with to communicate with Named Plaintiffs Counsel, you may do so using the following addresses and numbers: For the Present Member Class: For the Former Member Class: Wilson F. Green John Gibbs Fleenor & Green LLP Gibbs & Sellers, P.C. 204 Marina Drive Ste North Walnut Street Tuscaloosa, Alabama Demopolis, Alabama wgreen@fleenorgreen.com jgibbs@gibbsandsellers.com You may, of course seek the advice or guidance of your own attorney at your expense if you desire. DO NOT TELEPHONE THE COURT OR THE COURT CLERK S OFFICE FOR INFORMATION. Dated: June 9, 2015 Eddie Hardaway CIRCUIT JUDGE Page 8 of 8

9 CLAIM FORM The purpose of this form is to permit Settlement Class Members to submit a claim for payment on account of the settlement of a class action lawsuit styled Charles Glass & Ronnie Jennings v. Black Warrior Electric Membership Corporation, In the Circuit Court of Marengo County, Alabama, CV (the Action ). For more information about the Action, this form, and the settlement of the Action, please see the Class Notice available at the following website: The parties settlement agreement (the Agreement ) requires that each Settlement Class Member fully and truthfully submit this form so that it is received by the Settlement Administrator on or before November 10, Settlement Class Member Name: Last First Middle Initial 2. Settlement Class Member Number (Account) 3. Settlement Class Member s Years with service 4. Settlement Class Member s Current Address: Street Address Apt. No. City State Zip Code 5. Address at which Settlement Class Member was provided electrical service by Black Warrior Electric Membership Corporation ( Black Warrior ): Street Address Apt. No. City State Zip Code 6. If your identity cannot be confirmed through Black Warrior s records and the information on this Claim Form, Black Warrior reserves the right to require that you submit additional identifying information. Any such request will be communicated to you through the Settlement Administrator. Print Name: Signature: Date: SUBMITTING THIS FORM: To submit this form, you must mail it to the Settlement Administrator at the following address: Black Warrior Settlement Administrator P.O. Box 487 Birmingham, Alabama It is your responsibility to mail this completed form, and any documentation required under item 6, to the Settlement Administrator so that it is received by the Settlement Administrator no later than November 10, 2015.

10 Black Warrior Settlement Administrator P.O. Box 487 Birmingham, Alabama