First details emerge in suit against MEA

PALMER — If you thought the fallout from Matanuska Electric Association’s change in leadership had passed, think again.

Shortly after they were fired, two top managers — former information technology director Bruce Scott and former assistant general manager Tuckerman Babcock — filed suit, saying they weren’t given severance pay as required in their contracts. MEA doesn’t believe it should have to pay the severance.

The case has lately entered the motions phase. Lawyers on both sides are trading written motions that have swelled the court file and produced minor wins and losses for both sides.

One win for MEA was in its attempt to rope in former general manager Wayne Carmony, who was fired soon after the board directed him to fire Babcock and Scott. Carmony was added to the suit, making it a three-way battle, with the fired managers seeking damages from MEA and MEA seeking damages from Carmony.

Another win for MEA was in a motion to have the case moved to Anchorage. Carmony argued that since the vast majority of Valley residents are also MEA ratepayers and member-owners it would be impossible to find an unbiased jury if and when the case goes to trial.

Superior Court Judge Eric Smith ruled that such a connection to the case wasn’t enough to automatically disqualify jurors and that a person’s particular bias for or against MEA should be determined on a case-by-case basis during jury selection.

But MEA lost its bid to unseal Carmony’s employment contract. The contract has been a bone of contention for years among those who closely watch the utility. It became something of a symbol of what they said was the Carmony regime’s lack of accountability and transparency. When he was at MEA it was kept secret. And it will, for now at least, stay that way.

Some of the most revealing details of the motions filed so far come in discussing Scott’s and Babcock’s employment contracts.

“Carmony’s principal scheme regarding these employment contracts was to protect his own employment as MEA’s general manager by making it substantially more costly to the association to terminate his employment in the event that control of the MEA board membership shifted to a majority of members who were unfavorable to Carmony,” wrote Kevin Clarkson, one of the attorneys representing the board of directors in the suit.

More specifically, MEA alleges Carmony wrote in clauses that made it so the board could only fire Scott and Babcock for cause. If it fired either of them without a good reason, it would be liable to pay both of them hundreds of thousands of dollars in severance pay. Carmony could fire both of them for any reason. But if he were ousted, the new general manager didn’t have the same leeway.

This, MEA alleges, was a breach of Carmony’s duty to look out for the utility’s bottom line, since he was essentially doing a favor for Scott and Babcock that could potentially have cost the co-op substantial sums of money.

“In the event that MEA has liability to Scott and Babcock under their employment contracts, then Carmony is liable to MEA in an equal amount for his breaches of fiduciary duty to the association,” the claim alleges.

An affidavit from Scott at least partially backs up some of these claims. Scott writes that in 2001, after 17 years at MEA, he wanted to keep working there but worried about board politics, especially in light of what he described as a union takeover of the Chugach Electric Association board of directors, which immediately ousted senior management.

“I met with Mr. Carmony twice before signing the contract. He explained to me in those meetings that the purpose of the contract was to provide me some protection in case the composition of the MEA board of directors changed, and the board members wanted to fire me,” Scott says in the affidavit.

For his part, Carmony denies all of this. But the question of who will have to pay if and when Scott and Babcock are awarded damages is going to be decided at trial.

Contact Andrew Wellner at andrew.wellner@frontiersman.com or 352-2270.