Brown v. Pounds

MELTON, Justice,

dissenting.

Nothing in the text of the December 12, 2008 amendment to Cobb EMC’s bylaws violates the settlement agreement entered into by the parties to this case. To the contrary, the amendment, which increases the ability of Cobb EMC’s members to take part in special meetings, supports the settlement agreement’s goal of increasing the transparency of Cobb EMC’s corporate structure. Accordingly, I must respectfully dissent.

Analysis of this case requires that we look at the actual text of the settlement agreement and the bylaw amendment which has been brought into question. In relevant part, the settlement agreement provides that, at a meeting held within a certain number of days, Cobb EMC’s members:

will seek an amendment to the by-laws at the next meeting of Cobb EMC members .... Such amendment will seek to allow members the right to vote for directors by mail-in ballots subject to the development and implementation of appropriate security measures.

If members were allowed to vote for directors by mail-in ballots, in addition to physically attending a meeting to elect directors, wider membership participation would be encouraged.

In the same spirit of encouraging member participation, the Board adopted the December 12, 2008 amendment to Cobb EMC’s bylaws which states:

At any special meeting of the members of the Cooperative at which the election of directors is not on the agenda, the Board of Directors may provide that a member may be represented and may vote by executing a written proxy authorizing the designated Cooperative Proxy Manager to cast his or her vote. A Cooperative Proxy Manager shall be a person or persons employed by an independent firm *343engaged by the Board of Directors of the Cooperative to administer proxy voting. In order to vote by proxy, a member must sign and date a form appointing the Cooperative Proxy Manager to vote for the member by proxy and designating how the Cooperative Proxy Manager shall cast a vote for or against or to abstain from voting on items on the agenda. The Cooperative Proxy Manager shall receive the proxies until the close of business on the fifth business day prior to the meeting date, and shall count such proxies and present the proxies and the results to the Credentials and Election Committee. A written proxy is only valid for a single meeting. Proxy voting as provided in this Section 7a is not permitted where voting is by mail in ballot.

By implementing this amendment to the by-laws, the Board actually increased the ability of members to actively participate at special meetings, a result which, as the trial court found, would undeniably increase the transparency of corporate proceedings.8 In fact, the trial court found that the “by-law changes are not only consistent with Georgia law and Cobb EMC by-laws, but will also remove significant and historic barriers to member participation. These changes will promote inclusion in the cooperative’s governing process.” Therefore, rather than contradicting the parties’ settlement agreement, this provision enhances it. More members who either cannot or do not wish to attend a special meeting may have their voices heard by proxy on the issue of whether directors may be elected by mail-in ballot. This is directly in line with both the letter and the spirit of the settlement agreement.

Nonetheless, the majority, after conceding that the amendment does not violate the letter of the settlement agreement,9 concludes that the spirit of the agreement is violated because: “In essence, it allows the Board to unilaterally change the method of voting on the issue of the method of voting for directors, which was a core issue addressed in the Agreement.” The majority reaches this dubious conclusion, however, without giving any indication as to what it considers the spirit of the agreement to be or how the amendment *344negatively impacts this undefined spirit. As a practical matter, the bylaw amendment will likely increase the number of members who voice their opinion as to whether directors should or should not be elected by mail-in ballot. Instead of requiring strict attendance at a meeting,10 the new bylaw allows members to mail in their proxy to a Corporate Proxy Manager, who is required to vote in the manner instructed by the member. This method of voting increases the democratic nature of the voting process at special meetings. Therefore, it is the majority’s analysis, not the bylaw amendment, which undermines both the letter and the spirit of the settlement agreement between these parties.

Decided June 13, 2011. Schreeder, Wheeler & Flint, David H. Flint, Elizabeth L. Fite, King & Spalding, Dwight J. Davis, Daryl L. Joseffer, Phyllis B. Sumner, Paul D. Clement, Akin & Tate, S. Lester Tate III, for Brown et al. Parker, Hudson, Rainer & Dobbs, Tim J. Gutenberger, Jonathan L. Rue, for McGinnis et al. Carr & Palmer, W. Pitts Carr, Dupree & Kimbrough, Hylton B. Dupree, Jr., for Pounds et al. Robert F. Glass, amicus curiae.

Prior to the implementation of this amendment, proxy voting was very limited. Proxy voting could be accomplished only by the delivery of a proxy vote to a meeting by an adult family member residing in the home of the voting member. In transcripts of the proceedings before the court below, the Members have conceded that the limitations of this provision are problematic.

Because the amendment applies only to special meetings at which the election of directors is not on the agenda, it does not violate either OCGA § 46-3-325 (b) or the EMC bylaws which prevent the Board from amending existing bylaws or creating new ones “directly relating to the election of the board of directors.”

As pointed out by the majority, only a small fraction of members actually attend an annual meeting.