Information on removal of VEA directors presented in Pahrump

Editor’s note: This is Part 2 of a series on Valley Electric Association Inc.’s annual and special meeting. Watch for more on pvtimes.com or in the Pahrump Valley Times print edition. See video with the story on our Facebook page.

An attorney for Valley Electric Association Inc. presented the co-op’s interpretation of the bylaws on the removal of a member of the board of directors, laying out arguments why the process has to be done by district, during a special meeting called by Valley’s board. Hundreds of Valley’s member-owners and others were in attendance at the meeting that began just after Valley’s annual meeting.

Tammy Peterson, a partner in Las Vegas-based law firm Peterson Baker, broke down the co-op’s interpretation of the bylaws on the removal of a member of the board of directors during a special meeting at Pahrump Valley High School at the end of April. Her presentation also included information on how to call a special meeting.

The presentation included the breakdown of Article IV Section 6 of Valley’s bylaws that state the process of removing a director by the members and how Valley concluded that the process of removal of directors must be done by district.

Valley’s attorney is currently discussing the possibility of a meeting to remove Valley’s District 1 director Peter Gazsy with an attorney for VEA Members for Change, which has been actively trying to remove a majority of Valley’s directors since February.

According to Michael Hengel, executive vice president of communications and regulatory affairs for Valley, the Members for Change group has submitted enough signatures to recall Gazsy but is just short of the necessary requirement in District 6, represented by David Dawson, according to Valley’s count. That count is being validated by Members for Change.

Peterson wasn’t able to take any questions from the audience on her presentation, as Members for Change is now represented by legal counsel, she said.

“The ethical rules prohibit me from speaking directly to someone who is represented by an attorney…,” Peterson said.

Valley’s corporate general counsel for the past 10 years, Josh Weber, a partner in the law firm Davison Van Cleve, also was not able to answer any questions because members of VEA Members for Change may have been in the audience.

Weber gave a presentation on the board’s fiduciary duties during the meeting.

Peterson said that Members for Change wasn’t represented when Valley’s board of directors unanimously called the April 27 meeting by Valley’s board of directors. The meeting was called in light of questions by members of how to remove a board member from Valley and on fiduciary responsibilities of a member of Valley’s board of directors.

Director removal

Peterson explained that the board used the “canons of construction” to help interpret the meaning of the portion that allows member-owners of Valley to remove directors.

“When the board looks at the bylaws that govern the organization, and these are bylaws that were voted on by the members,” Peterson said. “When the board looks at these bylaws, they follow the canons of construction …they’re basically rules of interpretation that are in the law.”

The canons described included “words are given their commonly accepted meaning,” every word is significant, absent words cannot be supplied and that the “bylaws should be read in harmony as a whole,” Peterson explained.

“Finally, if there is a conflict between a specific provision and a general provision, then specific provision controls,” she said.

Using these canons, the board surmised that the specific provision about the removal of directors, Article IV Section 6 in the bylaws, is the provision to be used for the removal of a director of Valley’s board.

Also, it was surmised, using the canons of construction, that any charges made against a director must accompany a petition signed by a required number of members for removal to start the process.

Using the confines of the “canons of construction” and portions of Nevada Revised Statutes governing nonprofit cooperative corporations without stock in the state, which Valley is registered as, it was also concluded that directors were to be removed at the district level.

“With all of this together, the board interpreted the bylaws to say that since only members in a particular district can elect their members, then only those members in that district can vote to remove their members,” Peterson said.

In Valley’s bylaws, it’s stated that the removal of a director requires 10 percent of the members to sign. Valley has now concluded that this is 10 percent of the members in each district not 10 percent of Valley’s more than 18,000 members.

Members for Change collected a total of over 2,100 signatures, according to information on its Facebook page.

Contact reporter Jeffrey Meehan at jmeehan@pvtimes.com