Butler v. Coast Electric Power Assoc.
Plaintiffs, members of three rural power cooperatives, filed suit alleging that the cooperatives failed to refund excess "patronage capital" to their members as required by state law. In this case, the cooperatives argued that Mississippi Code 77-5-235(5)'s refund requirement conflicts with Congress's purposes and objectives as expressed in the Rural Electrification Act, federal regulations, and the cooperatives' loan agreements with the Rural Utility Service. Furthermore, they argued that plaintiff's for request appointment of a trustee or receiver conflicts with federal interests and the provision in their loan agreements that appointment of a receiver constitutes an event of default. The Fifth Circuit reversed the district court's decision to remand these consolidated cases to state court, holding that the cooperatives have a colorable federal preemption defense and were entitled to remove under 28 U.S.C. 1442's provision for federal officer removal. View "Butler v. Coast Electric Power Assoc." on Justia Law