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Elizabeth Warren represented large utility seeking to liquidate rural electric cooperative

Elizabeth Warren represented large utility seeking to liquidate rural electric cooperative

Contrary to campaign claim, Warren client sought to liquidate Cajun Electric Cooperative to aquire Big Cajun coal-fired plant

This is a GUEST POST by Matt J. Farley, an attorney in New Orleans, LA.

The post was submitted at my request after noticing a comment Matt left in response to my post Elizabeth Warren helped protect Dow Chemical against breast implant claims.  The comment disputed that Elizabeth Warren had accurately described her role in the Cajun Electric Power Coop bankruptcy case disclosed on a list of cases released by Warren minutes prior to the last debate.

Given the controversy over Warren’s role representing large corporate interests, I asked Matt to submit a guest post elaborating on his comment.  The entry below describes how Warren inaccurately described her role as trying to save a rural electric cooperative, when in fact she represented a large electric company seeking to liquidate the cooperative in order to acquire its prime asset, the coal-fired Cajun Electric plant near Baton Rouge.

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Warren Had To Destroy Cajun Electric In Order To Save It?

I’m not from Massachusetts, and I’m perfectly willing to let the good people of Massachusetts decide who their Senators should be without my assistance. But I do think you’re entitled to the facts before you vote, and in at least one respect Professor Warren is not being accurate in her description of one of the cases she handled.

Rather than working to save a rural electric cooperative, Warren represented a large utility which sought to liquidate the cooperative and purchase the cooperative’s main asset, a large coal burning plant north of Baton Rouge.

Background

I’m an attorney. From 1996 to 1999, I had the privilege of living and breathing a large corporate bankruptcy known as Cajun Electric.

The case stands out in my memory because it presented unique and complex issues of law, and involved billions of dollars.  The case was so important a part of my practice for so long, that I wrote a law review article about it for the Loyola Law Review.  You also may find an article, Ragin’ Cajun, of interesting background.

When I read that Professor Warren was running for office, the memory of her participation in Cajun Electric came to mind, and I began following Legal Insurrection in part to see of any reference was made to the case.

That led me to Professor Warren’s description of her role in Cajun Electric, as it appeared on the website for The Boston Globe. The description is:

In re Cajun Electric Power Cooperative, 150 F.3d 503 (5th Cir. 1998), cert. denied sub nom Mabey v. Southwestern Electric Power Co., 119 S.Ct. 2019 (1999). In this case, Elizabeth represented a company that offered a plan to help save a bankrupt rural power cooperative. The company also helped defray litigation costs for some members of the cooperative. Elizabeth sought to preserve the plan to save the company, and the Fifth Circuit ruled in favor of Elizabeth’s position.

I can’t imagine that Warren really believes that she was helping to save a rural power cooperative. Her description is seriously inaccurate both by omission and commission.

What Really Happened

When you think of a rural cooperative, you probably think of an organization composed of your neighbors that buys electricity from a utility, distributes it to the coop members, and give prizes out to the coop members when there’s a surplus. A smalltime, homey kind of organization.

In contrast, Cajun Electric was big business. It was a non-profit corporation like its smaller cousins, but generated and transmitted enough electricity to power well over a million homes. In the jargon, Cajun was a “generation and transmission (G&T) cooperative”; the coop you buy your power from is a “distribution” cooperative. The difference is one of scale and asset-base.

Cajun Electric filed bankruptcy because it had run up a debt of $4 billion to an arm of the federal government, the Rural Utilities Service. To Cajun’s surprise, the Louisiana Public Service Commission ruled that Cajun could not pass a huge chunk of that debt onto its customers, with the result that Cajun was massively insolvent.

The Plan was to Liquidate Not Save Cajun

After some maneuvering including a trip to the US Supreme Court, a federal court sitting in Louisiana court appointed a highly regarded former bankruptcy judge to be Cajun’s trustee. The trustee determined that the only feasible course of action was to sell Cajun’s most valuable asset, distribute the sale proceeds to Cajun’s creditors (mainly the government) and thereafter wind up Cajun’s affairs.

At the time (1996) most people in the electricity business anticipated that the business would be deregulated, with the result that a scramble developed for existing power plants. Fortunately for Cajun’s creditors, Cajun owned a real plum of a power plant, the “Big Cajun” facility located a bit north of Baton Rouge.

Let’s talk about Big Cajun, because Professor Warren doesn’t. It has a monster of a carbon footprint. The plant at the time had three coal-burning units capable of producing 1,620 megawatts of electricity. It used between 5 and 6 million tons of coal a year. (If Professor Warren had visited the plant, she would have found her car lightly covered with ash when she went back to the parking lot.) The coal was mined from the Powder River Basin in Wyoming, shipped by train to a terminal near St. Louis, and then put on Mississippi River barges for the last leg to the power plant.

The trustee’s decision to sell the Big Cajun generated a great deal of interest among possible buyers. By the time of Professor Warren’s participation in the case in the 5th Circuit Court of Appeals, there were three competing bankruptcy plans: one sponsored by the trustee, one sponsored by Enron, and one sponsored primarily by Professor Warren’s client, of whom more in a moment.

Now here’s the thing: none of these plans was intended to “save” Cajun Electric.

Implementation of the plans might have resulted in a “zombie Cajun” that existed as a legal entity but without assets or employees. But the goal of each plan was (in exchange for a $1 billion or so to be paid to Cajun’s creditors) to transfer Big Cajun to a for-profit company whose intent was to run the plant for maximum return on investment, even if that meant laying off a goodly number of Cajun’s 400-plus employees.

Warren’s statement that “Elizabeth represented a company that offered a plan to help save a bankrupt rural power cooperative,”  simply is not the case. The plan was to liquidate Cajun Electric, not to save it.

Warren represented SWEPCO

Now, who was the company that Professor Warren was representing? And why doesn’t Professor Warren mention its name?

Warren’s appeared on behalf of Southwestern Electric Power Company (SWEPCO.)  SWEPCO was then and is now a well-respected company that has been providing reliable electric service to customers in the Shreveport area for over 100 years. You would think Warren would be proud to mention her client’s name.

The trick is that both SWEPCO and its corporate parent were (and to a large extent still are) old-line fossil fuel utilities. They are able to provide electricity reliably because they burn coal, a tried and true technology.

In representing SWEPCO, Warren was representing the interests of a large power company, not the interests of the rural or other electric users.

Warren argued the case for SWEPCO, and was successful in having the lower court case reversed and the case sent back to the bankruptcy court.  Warren’s client was outbid and never ended up purchasing Big Cajun.

Conclusion

So in short: Warren characterizes herself as working to save a rural electric cooperative, when she did no such thing. Her client was a large power company that wanted to liquidate the cooperative, not to save it, in order to acquire its prime asset, a large coal-powered electric plant.

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WAJ adds:  Here is an image of the 5th Circuit docket showing Warren’s entry of appearance.

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Comments

Coupled with the news about the Obama campaign actively getting donations from foreigners, it’s east to see why I believe a Democrat tells the truth only when their mouths are shut…usually, though I’m sure they still lie when breathing…

Edit needed here: “So in short: Warren characterizes herself as working to save a rural electric cooperative, when she was did no such thing. ”

Remove “was”.

    William A. Jacobson in reply to creeper. | October 9, 2012 at 8:38 am

    yes, that looks like typo, fixed.

      Juba Doobai! in reply to William A. Jacobson. | October 9, 2012 at 9:11 am

      Now you have a grammatical error. “Working” should actually be “having worked.” Then, you can use “did no such thing.” If you leave “working,” then you will have to change to “was doing” to avoid the grammatical error.

        9thDistrictNeighbor in reply to Juba Doobai!. | October 9, 2012 at 10:15 am

        Coincidentally, our homeschool English lesson for today is on verb tenses. I’m going to use this in the lesson. 😉

Warren lives a life of lies. Keep peering behind the curtain, Professor!

“Let’s talk about Big Cajun, because Professor Warren doesn’t. It has a monster of a carbon footprint. The plant at the time had three coal-burning units capable of producing 1,620 megawatts of electricity. It used between 5 and 6 million tons of coal a year. (If Professor Warren had visited the plant, she would have found her car lightly covered with ash when she went back to the parking lot.)”

Yes but the money was good.

Hypocrisy is hardly the word at this point….

    Juba Doobai! in reply to Cassie. | October 9, 2012 at 9:14 am

    The ‘money’ quote the is “the money was good.” That’s where it is for Democrats. They are serious money chasers even while pretending to be altruistic.

Bravo! Thank you, Matt! Your time and effort is much appreciated. Warren is one heck of a liar.

But if we use the logic of one, James Carroll of the Bo Glo, if Elizabeth Warren believed she was saving a small rural electric cooperative then she was doing just that and who are we philistines to question the motives of a woman of Warren’s pedigree? Vote Warren!!!!!

Like Obama’s BS it looks like Warren’s bullsh*t is a renewable fuel: there’s plenty of it and it’s found everywhere decomposing.

    Doug Wright in reply to Sally Paradise. | October 9, 2012 at 9:24 am

    Like the comment!

    However, in the interests of public safety, always wash your hands thoroughly for at least 20-seconds after touching that BS! 😉

      barbara in reply to Doug Wright. | October 9, 2012 at 9:40 am

      Doug, since we’re usually reading that BS, shouldn’t it be “wash your eyes”? ;-p

        Doug Wright in reply to barbara. | October 9, 2012 at 9:47 am

        Hey, my concern is with public safety, not sanity, that’s almost already been proven to be sorely diminished in certain circles!

        Still, excellent point regarding protecting ourselves! 🙂

TrooperJohnSmith | October 9, 2012 at 9:10 am

Why is anyone shocked? I’m not. She’s a typical limousine lefty. She rolls this populace off her forked tongue to get votes from the adoring left, who eat up this stuff as if were manna from heaven. All the while, she hides behind this false curtain of inviolability, erected by a fawning news media, drawn from the same well of pathetic believers who feed on her populist rhetoric. It’s the stock and trade of the Peoples’ Democratic Socialist Party Of America, aka, the DNC. Like all modern socialism, it’s just the latest version of Feudalism, except now, the Lords must use gifts, lies and deceit to control the Serfs.

I now have incontrovertible proof Liz Warren is NOT Indian. Hell, everyone knows that telling the truth was endemic to the indigenous American culture. Well, Warren and Truth are as polar opposite and co-existent as north and south. She’s not even truthful 1/32 of the time. There. Case closed.

Finally, as a life-long hater of lawyers, Legal Insurrection has singlehandedly shown me that most lawyers are pretty good folks, and some, like the good P’fessor and a lot of you all, are downright great. Thanks, LI.

    Juba Doobai! in reply to TrooperJohnSmith. | October 9, 2012 at 9:18 am

    LI showed me lawyers can actually write sensibly and plainly. I had to read a big whomping lot of case law in grad school, and I did so cussing the bastards who took a beautiful language and made it unnecessarily turgid to near incomprehensible.

      TrooperJohnSmith in reply to Juba Doobai!. | October 9, 2012 at 6:47 pm

      Wow. This is the only appearance of ‘turgid’, outside a biology book or Penthouse Letters, known to exist in the English language.

      🙄

If I were advising Warren I’d suggest that she do an Extreme Makeover on her Campaign. She should do an ad that sits her in front of a fireplace in a nice big plaid fabric armchair. In it she stares into the camera and tells MA in a sincere voice with those concerned blue-eyes that she’s the best candidate for the Senate because her whole life has been spent screwing the Middle Class and lying to climb the ladder of professional and academic success. As a result she’s uniquely qualified as the Democrat candidate, following in the footsteps of MA’s finest, Teddy Kennedy.

DINORightMarie | October 9, 2012 at 9:26 am

I can’t understand how such a delusional, pathological liar can function in society. Being sheltered and coddled by her fellow-travelers is the only explanation I can fathom.

Does this woman – or any of her supporters – even know what the word “truth” means? Or is truth, in her alternate universe, whatever she wants it to be at a given moment in time? I suppose that is a shorter definition of “leftist.”

Pretzel logic.

In almost any state, reports like this would be devastating. Even to smugly enlightened Massachusetts voters, the drip drip drip of revelations should make a difference, but P.J. O’Rourke cautions that “there’s no getting through to the highly perceptive”.

    Tparty in reply to gs. | October 9, 2012 at 12:27 pm

    Mercy, you beat me to my point. I can only add that the Globe had Marsha Coakley up double digits the week before the election, only to have Brown soundly defeat a floundering and flawed candidate. I suspect the same will happen to this even more grotesque candidate.

    What you are seeing is the government media complex attempting to influence the election by depressing voter turnout and ATTEMPTING to suppress facts or run cover for Chief Spreading Bull. In other words, the typical communist playbook for gaining and holding tyranical political power.

And now the really interesting question — where, if anywhere, was she admitted to practice and in good standing when this was going on?

legacyrepublican | October 9, 2012 at 9:35 am

Mr. Farley said “I can’t imagine that Warren really believes that she was helping to save a rural power cooperative. Her description is seriously inaccurate both by omission and commission.”

I think you could substitute his observation about Warren’s belief “that she was helping … rural power cooperative” with “she believed she was a native american” or “she thought she could practice law in MA without a license” or any of her other claims and still come to the same assertion that she was inaccurate and had committed sins of omission and commission.

What an elegant, simple, and powerful summation of her behavior Mr. Farley. You should be the head of the DOJ.

Thank you for the guest posting Prof. Jacobson. On target as always.

I am comforted in the knowledge that instructors like you are teaching and showing integrity to your students through your dedication to a high standard of legal ethics and simple honesty.

C.U. finally had enough of Ward Churchhill. Will Haavud ever do the same?

casualobserver | October 9, 2012 at 9:56 am

For those who do not buy into progressive MA politics, conservatives and independents alike, Prof. Jacobson may be on a path to a sincere and well-deserved award (if only in words). No doubt his relentless but accurate – meaning fact based – reporting and opinion-making on Warren’s ‘legal career’ is making a significant impact. Polls indicate a very worrisome drop in trustworthiness that is even being reported by television news programs in the state. It is impossible to think this is due solely to her presence in debates as her demeanor and words are consistent in tone since day one. It is also hard to imagine Brown’s campaign would ever have had either the ammunition or the nerve to consistently highlight her hypocrisy.

The diligence in presenting the case in such a way that her defenders may only resort to partisan and dubious opinions, leaving them ineffective to date, is noticed by more than the usual news outlets. And it is rewarded by Warren’s sharp increase in ‘unfavorable’ views from the most recent polling. At best she ties Brown overall for votes. In a state that still is swooning heavily for Obama by a 2 to 1 margin (again from polls), that is significant.

9thDistrictNeighbor | October 9, 2012 at 9:57 am

I am not an attorney. What Warren did in all of these cases looks to me like practicing law on behalf of her clients, nothing else. Her problem comes when she either denies by omission or obfuscates in order to align her past actions with her current political bias. From what I can see, she did not seek to use the law as she advocates as a candidate—as a vehicle for insert-social-justice-du-jour. She is trying to backtrack from that to get votes. We’ll have to see whether her strategy works.

Henry Hawkins | October 9, 2012 at 10:28 am

Loving it. Kudos to Farley – and to our host for knowing what to pull out of the mixed bag of comments.

Scott Brown leads by 4 points in new WBUR poll. Taken after the Romney debate. Boston Magazine suggests Brown got a “Romney bounce”

Story on poll: http://www.wcvb.com/news/politics/Scott-Brown-retakes-lead-over-Elizabeth-Warren-in-new-poll/-/9848766/16909778/-/9d4j88z/-/index.html

Mister Natural | October 9, 2012 at 11:47 am

I’m shocked, shocked.
Fauxcahontas speak with forked tongue?
Shocked

If one looks at the ‘case query’ attachment Ms. Warren is listed as one of the attorneys- don’t you need a license (somewhere) to be able to make that claim?

Beautiful take-down. I did chuckle at the “Zombie Cajun” image.

Good post, Mr. Farley.

I, too, would like to know in which state Warren held an active law license during all of this litigation. Can you update us, Professor?

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