Alabama – Statutory Interpretation – Cooperative Payouts

The Supreme Court has reviewed the standards surrounding spoliation of evidence in the context of a products liability action.  Recherche, LLC, a member of an electrical cooperative called the Baldwin County Electric Membership Corporation, sued the cooperative for failure to assign certain excess revenues to its members in accordance with Ala. Code § 37-6-20. The cooperative argued that it had abided by the terms of the statute, and moved the trial court to dismiss, which was granted.

The Supreme Court centered its analysis around § 37-6-20. Essentially, the statute states that revenue of a cooperative in excess of what must be allocated to certain categories of investment for the benefit of the cooperative must be paid back to cooperative members. Baldwin EMC argued that the statute granted a degree of discretion in the manner in which it paid refunds to its members, while Recherche argued the statute required annual cash payouts.

The Court reviewed federal precedent which dealt with a similarly situated cooperative which, instead of making annual cash payouts, was simply crediting member accounts whenever there were excess funds. In that case, the court ruled that the cooperative had the discretion to make the payments as it had, because the statute did not define “patronage refund” or “distribution,” or use the word “cash” at all. The statute did not require annual cash payouts the way the plaintiff had been requesting. The Court was persuaded by precedent, and affirmed the dismissal of Recherche’s complaint because the cooperative’s payments were in compliance with the law.

Recherche, LLC v. Baldwin County Electric Membership Corporation, (October 18, 2019).


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