A Hard Pill To Swallow

Opinion

By Linda Kaye Rogers

As with most settlements of any kind, there is a compromise involved. The proposed PEC settlement is no different. And, as is usual, the compromise does not make everyone happy.

The portion of this settlement that requires the most "give" by members is the member payment of $1.4 million in addition to releasing the Defendants from any responsibility. The settlement calls for $4 million to pay legal fees, court costs and "bonuses" to the Plaintiffs. The bonuses will be a sum paid to the Plaintiffs for their time and energy. Plaintiffs are not pressing for this and it is expected to be a very small portion of the $4 million.

PEC's insurance carrier, AIG, has agreed to pay for $2.6 million, leaving the balance of $1.4 million. Members will wind up paying this amount in one form or another, not the management of PEC, the Directors, or Advisory Directors, who were named as the Defendants in the lawsuit.

Then there is the gauling additional agreement that members will not pursue any future legal action against the named Defendants. This is standard procedure when an insurance settlement is made, and this is an insurance settlement. It means that no member can bring another civil suit with the same charges. This is like double jeopardy. Now, this clause covers only up to the date of the proposed settlement, March 10, 2008. If any named Defendant commits a further "error or omission" after this date, suit can be filed.

While the judge could order Defendants to pay the $1.4 million, it would be a very dangerous move. It would set precedence where no sitting board member of any kind would be immune from personal liability. No one would want to serve on a board if they could be sued personally. This is the purpose of the liability insurance.

All this said, this is probably the best deal we members are going to get. Discussions with attorneys, John Warrall, a primary Plaintiff in the lawsuit, PEC General Manager Juan Garza and others with experience in such matters, indicate we stand to lose a great deal more if we (PEC member/customers) reject the proposed settlement and go to trial. First is the fact that it would take several years for a trial to run its course. Even if the Plaintiffs in the class action case were to win, the case could be appealed, so add another four to five years. Historically in Texas, cases such as these are most often lost by the plaintiffs.

Is it fair? Not by my reckoning. State Senator Troy Fraser of Marble Falls, a PEC member, has stated he sees nothing fair about it. I'm spitting fire, but all things considered we may just have to swallow this bitter pill and hope that some good comes from it. I will be writing my letter of objection regarding this proposed settlement. I will state that while I DO NOT see this as fair, I acknowledge that is seems to be a no-win situation for the members and I will accept it as the lesser of possibly worse options. There still remains the possibility that criminal charges could be filed from an ongoing investigation by the Llano County D.A., and a state Senate investigation is not yet complete. For those believers in "final judgments," there still may be some guarantee of satisfaction.

Linda Kaye Rogers grew up on a small family farm in the Rio Grande Valley. She received her BA and Masters of Science in Social Work from UT Arlington. She has taught smoking cessation, communication skills, stress management and parenting in hospitals, corporations, community groups and churches. Linda Kaye moved to Wimberley in 2000 where she built a straw-bale cottage and immediately established a rainwater collection system as her water supply. That same year she began volunteering at the Katherine Anne Porter School and has worked in various capacities at the school. She is an avid organic gardener, animal lover, conservationist, and environmentalist. In 2005 she spearheaded efforts to defeat a road bond that would have benefited a developer and cost Woodcreek North residents a dramatic and 20-year tax increase. Linda Kaye is a member of PEC4u, the group of PEC members who initiated the investigation of PEC Board governance and practice.