WILLIAM H. STEELE, Chief District Judge.
This matter comes before the Court on defendant's Motion to Dismiss or Stay (doc. 2), and Plaintiff's Motion to Consolidate (doc. 17). The Motions have been briefed and are ripe.
Plaintiff, William A. Davis, brought this putative class action against defendant, Central Alabama Electric Cooperative ("CAEC"), asserting claims for declaratory and injunctive relief, breach of contract, unjust enrichment and accounting. CAEC is a rural electric distribution cooperative organized under Alabama law, of which plaintiff is alleged to be a member. According to the well-pleaded factual allegations of the Complaint, "Defendant has not only consistently recognized Patronage Capital, but has segregated it and assigned a portion of it to each of its members." (Doc. 1, Exh. A, ¶ 13.) The Complaint further alleges that "Defendant has repeatedly failed, and continues to fail, to distribute any Patronage Capital as refunds or rate reductions as required by Ala. Code § 37-6-20." (Id., ¶ 14.)
Plaintiff's theory of relief is that CAEC's practice of withholding these funds violates an Alabama statute mandating that excess revenues "be distributed by the cooperative to its members as, and in the manner, provided in the bylaws, either as patronage refunds . . . or by way of general rate reductions, or by combination of such methods." Alabama Code § 37-6-20. Plaintiff seeks a declaration (including an order of restitution) that CAEC is in violation of § 37-6-20. Plaintiff also seeks damages on both (i) a breach of contract claim alleging that CAEC's bylaws are a written contract that "incorporates the statutory obligations of Ala. Code 37-6-1, et seq., including the obligation under Ala. Code § 37-6-20 to distribute certain excess revenue" (doc. 1, Exh. A, ¶ 33); and (ii) an unjust enrichment claim alleging that CAEC "has wrongfully withheld from Plaintiff and the putative Class members excess revenue that should have been distributed in accordance with Ala. Code § 37-6-20" (id., ¶ 38.)
CAEC has moved to dismiss or stay Davis's Complaint as a later-filed class action over which jurisdiction is lacking until such time as there has been a ruling in the earlier-filed case, styled Pamela Caver, et al. v. Central Alabama Electric Cooperative, Civil Action 15-0129-WS-C. By separate Order entered on this date, this Court has dismissed the Caver action on the merits. Because there are no longer any related proceedings that might warrant dismissal or stay of this case under the authority cited by CAEC, defendant's Motion to Dismiss is
In light of these developments, what remains is the portion of CAEC's Motion to Dismiss requesting dismissal of Davis's Complaint on the following grounds: (i) plaintiff's claims are preempted by the Rural Electrification Act and its accompanying regulations; (ii) plaintiff does not have a legal right to annual cash distributions under the Alabama statute; (iii) plaintiff agreed to return cash refunds to CAEC in exchange for capital account credits; and (iv) plaintiff has neither a private right of action nor standing to sue CAEC. (See doc. 2, ¶ 7; doc. 33, Exh. 1.) Plaintiff vigorously opposes dismissal on each of these grounds. (See doc. 19.)
Defendant's Motion posits that the Complaint fails to state claims upon which relief can be granted; therefore, it is properly analyzed under Rule 12(b)(6), Fed.R.Civ.P. To withstand Rule 12(b)(6) scrutiny and comply with the minimum pleading requirements of Rule 8(a), a plaintiff must plead "enough facts to state a claim to relief that is plausible on its face," so as to "nudge[ ][its] claims across the line from conceivable to plausible." Bell Atlantic Corp. v. Twombly, 550 U.S. 544, 570, 127 S.Ct. 1955, 167 L.Ed.2d 929 (2007). "A claim has facial plausibility when the plaintiff pleads factual content that allows the court to draw the reasonable inference that the defendant is liable for the misconduct alleged." Ashcroft v. Iqbal, 556 U.S. 662, 678, 129 S.Ct. 1937, 173 L.Ed.2d 868 (2009) (citation omitted). "This necessarily requires that a plaintiff include factual allegations for each essential element of his or her claim." GeorgiaCarry.Org, Inc. v. Georgia, 687 F.3d 1244, 1254 (11th Cir. 2012). Thus, minimum pleading standards "require[ ] more than labels and conclusions, and a formulaic recitation of the elements of a cause of action will not do." Twombly, 550 U.S. at 555. As the Eleventh Circuit has explained, Twombly / Iqbal principles require that a complaint's allegations be "enough to raise a right to relief above the speculative level." Speaker v. U.S. Dep't of Health and Human Services Centers for Disease Control and Prevention, 623 F.3d 1371, 1380 (11th Cir. 2010) (citations omitted). "To survive a 12(b)(6) motion to dismiss, the complaint does not need detailed factual allegations, . . . but must give the defendant fair notice of what the plaintiff's claim is and the grounds upon which it rests." Randall v. Scott, 610 F.3d 701, 705 (11th Cir. 2010) (citations and internal quotation marks omitted).
For purposes of this Rule 12(b)(6) analysis, the Court accepts as true all well-pleaded factual allegations of the Complaint, and draws all reasonable inferences in the plaintiff's favor. See, e.g., Keating v. City of Miami, 598 F.3d 753, 762 (11th Cir. 2010) (in reviewing Rule 12(b)(6) motion, court must "accept[] the facts alleged in the complaint as true," "draw[] all reasonable inferences in the plaintiff's favor," and "limit[] our review to the four corners of the complaint"). Notwithstanding this deference to plaintiff's pleading at the Rule 12(b)(6) stage, it is also true that "[l]egal conclusions without adequate factual support are entitled to no assumption of truth." Mamani v. Berzain, 654 F.3d 1148, 1153 (11th Cir. 2011).
The central argument animating CAEC's Motion to Dismiss is that the Alabama statute on which plaintiff's claims rest "establishes as a matter of law that the Plaintiffs have no legal or property right to demand a cash distribution of patronage capital at any time." (Doc. 33, Exh. 1 at 16.) This contention calls for in-depth scrutiny of the terms and features of Alabama Code § 37-6-20, the statute animating plaintiff's claims.
The basic structure of § 37-6-20 is to identify various categories of items that an electric cooperative may subtract from its revenues for any fiscal year, and to provide for "distribution" of the remainder (referred to herein as "Excess Revenues") to the cooperative's members on an annual basis. Per the express statutory language, Excess Revenues equal "[r]evenues of a cooperative for any fiscal year," less amounts necessary for each of the following: (i) "to defray expenses of the cooperative and of the operation and maintenance of its facilities during such fiscal year;" (ii) "to pay interest and principal obligations of the cooperative coming due in such fiscal year;" (iii) "to finance or to provide a reserve for the financing of, the construction or acquisition by the cooperative of additional facilities to the extent determined by the board of trustees;" (iv) "to provide a reasonable reserve for working capital;" (v) "to provide a reserve for the payment of indebtedness of the cooperative maturing more than one year after the date of the incurrence of such indebtedness in an amount not less than the total of the interest and principal payments in respect thereof required to be made during the next following fiscal year;" and (vi) "to provide a fund for education in cooperation and for the dissemination of information concerning the effective use of electric energy and other services made available by the cooperative." Alabama Code § 37-6-20.
Having defined what Excess Revenues are, the statute then directs that such funds "
In examining § 37-6-20, the Court derives guidance from relevant canons of statutory construction.
Again, the crucial language of the relevant Alabama statute provides that when electric cooperatives accrue Excess Revenues in a fiscal year, such revenues "shall be distributed by the cooperative to its members as, and in the manner, provided in the bylaws, either as patronage refunds prorated in accordance with the patronage of the cooperative by the respective members paid for during such fiscal year or by way of general rate reductions." Ala. Code § 37-6-20. Pursuant to the plain language of the statute, then, an electric cooperative must distribute Excess Revenues "as, and in the manner, provided in the bylaws." CAEC's Bylaws thus become significant to the inquiry.
(CAEC Bylaws, § 8.02 (adopted August 11, 2006).)
To recap, then, plaintiff's claims in this lawsuit are that CAEC is operating in violation of § 37-6-20 by failing to pay out Excess Revenues to its members in the form of cash distributions on an annual basis. On its face, the statute provides that Alabama electric cooperatives such as CAEC must distribute Excess Revenues "as, and in the manner, provided in the bylaws." CAEC's Bylaws state that such funds are to be paid out in the form of credits to each patron's capital account, with those credits being tracked in CAEC's books and records and ultimately retired by the Board of Trustees in its discretion. Thus, CAEC's Bylaws (to which § 37-6-20 defers in establishing the manner of distribution of Excess Revenues) provide for a distribution method in the form of accrual of patronage credits in capital accounts, with such credits to "have the same status as though they had been paid to the patron in cash . . . and the patron had then furnished the Cooperative corresponding amounts for capital." Certainly, then, nothing in the "as, and in the manner, provided in the bylaws" clause of § 37-6-20 or the corresponding portions of CAEC's Bylaws would lend support to plaintiff's theory that CAEC is required to make cash payouts of Excess Revenues every year.
Plaintiff's position is further weakened by a straightforward, plain-language reading of other relevant provisions of § 37-6-20. Recall that the statute requires that Excess Revenues for a fiscal year "shall be distributed" to a cooperative's members "either as patronage refunds . . . or by way of general rate reductions, or by combination of such methods." Nowhere does the statute use the word "cash" or expressly forbid electric cooperatives from using methods other than cash (such as accounting credits) to "distribute" the required distributions. Nothing in the plain language used in the statute would impose a specific requirement that all such distributions be made in cash. Plaintiff offers no persuasive argument otherwise; instead, he appears to assume that such a statutory mandate exists. In that regard, plaintiff's principal argument is that § 37-6-20 "mandates distribution of a refund" and "affords the Board no discretion to withhold excess revenues" and that "nowhere in the statute does it mention credits." (Doc. 19, at 5, 26-27.) Thus, Davis's position appears to be that CAEC is not distributing Excess Revenues at all because it is not paying them out in cash. But a common-sense, plain-meaning construction of the term "distributed" does not confine it to any one method of distribution. A distribution is still a distribution whether made via cash or accounting credits. Either way, the pool of Excess Revenues would be drained, regardless of whether the money is physically gone or simply segregated in CEAC's accounting records. In short, nowhere in his brief does Davis identify a statutory, textual basis for his belief that CAEC's annual distribution of its pool of Excess Revenues must take the form of direct cash payouts to members, or that draining the pool via patronage credits allocated to each member's capital account is impermissible under § 37-6-20. Plaintiff would have this Court import into the statute limitations, constraints and requirements that are not there. Of course, a court interpreting a statute is not at liberty to engage in such judicial rewriting of its provisions to supplement, alter or improve upon what the legislature said.
Upon examining the "distributed" and "manner" facets of § 37-6-20 collectively, the infirmities in plaintiff's theory of liability are further exposed. By its terms, the statute provides that electric cooperatives must distribute Excess Revenues to their members on an annual basis, in the manner provided in their bylaws, either as patronage refunds or general rate reductions. As noted, there is no textual basis in § 37-6-20 for equating the term "distribute" with "make a cash payment."
This construction of § 37-6-20 finds support in a pair of Alabama appellate decisions. In dicta, the Alabama Court of Civil Appeals opined that "[e]ven though § 37-6-20 is not a taxing statute, it mandates that a cooperative return any excess advances to its members and
In light of the foregoing, the undersigned is of the opinion that plaintiff's claims — which, again, are predicated on the notion that § 37-6-20 requires CAEC to pay out Excess Revenues to members in cash on an annual basis — fail, as a matter of law. As a matter of statutory interpretation, the Court finds that § 37-6-20 contains no such cash payout requirement, and no provisions forbidding distribution of Excess Revenues via capital credits, as contemplated by CAEC's Bylaws and as approved by the Alabama Court of Civil Appeals. In light of this construction of § 37-6-20, plaintiff cannot sustain viable claims against CAEC on the theory that the statute requires annual cash payments to members (rather than allocation of accounting credits).
As discussed supra, the Court finds as a matter of statutory interpretation that Alabama Code § 37-6-20 does not require electric cooperatives like CAEC to distribute Excess Revenues to members in the form of annual cash payments. Because plaintiff's Complaint is expressly tethered to the notion that the statute does in fact require cash distributions (as opposed to distribution via accounting credits to members' capital accounts), defendant's Motion to Dismiss is properly granted. That said, even if Davis were correct that § 37-6-20 required distributions to be made in cash, the Complaint would still fail to state a claim upon which relief can be granted, and dismissal would remain proper.
To understand this determination, one need look no further than CAEC's Bylaws. Again, it is undisputed that those Bylaws describe a system under which CAEC issues patronage credits (including, though perhaps not limited to, Excess Revenues) to each member's capital account. The Bylaws further contain the following provision:
The Bylaws also demonstrate recognition by CAEC and its patrons that the Bylaws "shall constitute and be a contract between the Cooperative and each patron, and both the Cooperative and the patrons are bound by such contract." Plaintiff readily acknowledges in his pleadings that the Bylaws represent a binding contract between CAEC and its members.
The significance of the above-quoted Bylaws language is this: As part of his contract with CAEC, plaintiff (and all other members of the cooperative) agreed that funds credited to his individual capital account were the same as if CAEC had paid them out in cash in compliance with a legal obligation and plaintiff had then returned those funds to CAEC as capital contributions. So the contract sets forth plaintiff's agreement that amounts credited to his capital accounts are the equivalent of cash payouts that plaintiff then returns to CAEC for capital. Thus, even if § 37-6-20 required CAEC to distribute Excess Revenues in cash each year, the Bylaws say that everyone agrees the members' capital account credits are effectively cash payouts voluntarily returned by the members as capital contributions. This provision of the Bylaws would, on its face, eradicate any violation of § 37-6-20 caused by CAEC's distribution of accounting credits rather than cash, inasmuch as the members had agreed to plow any cash they received back into the cooperative as capital. Seen through this lens, the conduct plaintiff ascribes to CAEC does not violate the statute because the Bylaws erase the distinction between cash payouts and capital account credits by saying that even if plaintiff were statutorily entitled to the former, plaintiff authorizes CAEC to use them as the latter. There can be no violation of § 37-6-20 where CAEC is crediting Excess Revenues in the manner that plaintiff himself has authorized it to do, even if CAEC were required by statute to make cash payouts.
For all of the foregoing reasons, it is
DONE and ORDERED.