A proposed class action in Montana alleges non-profit 3 Rivers Telephone Cooperative has discriminated against Native American owner-members who make up the Browning Telephone/Internet Exchange by denying them the use of capital credits worth nearly $9 million after the exchange was sold to another company.
The area in which 3 Rivers provides telecom services includes Glacier County, Montana, which houses more than 13,000 people, the 33-page lawsuit says. According to the lawsuit, 64 percent of Glacier County’s population is Native American, and specifically includes members of the Blackfeet Tribe.
As a rural telecom cooperative organized under the Rural Electric and Telephone Cooperative Act, 3 Rivers is required to operate on a not-for-profit and cooperative basis for the mutual benefit of its members, who are essentially treated as investors. On that basis, 3 Rivers is owned by its roughly 15,000 residential and commercial customers, approximately 2,000 of whom are Native American, according to the suit. Per the case, 3 Rivers members, based on their patronage, are allocated capital credits, which amount to a percentage of the co-op’s annual earnings over and above expenses.
Central to the allegations in the complaint is an agreement whereby Siyeh Communications (SiyCom) agreed to purchased 3 Rivers, a deal which was completed on December 31, 2020, the case states. The lawsuit alleges that when 3 Rivers sold the Browning Exchange to SiyCom, the defendant’s board considered including members’ capital credits in the sale but ultimately decided not to do so because SiyCom “could not afford to buy the Browning Exchange” if they were included.
Upon the sale, the 3 Rivers board, the lawsuit alleges, decided not to retire the capital credits of Browning Exchange members, but instead retain the credits for the benefit of the co-op and its remaining members, and to eventually retire the capital credits over a period of roughly 25 years.
“The amount of capital credits that 3 Rivers has retained from the former Browning Exchange members is believed to be approximately 8.88 million dollars,” the filing claims.
The suit charges that 3 Rivers has capital reserves in excess of its operating costs and expenses, an amount sufficient enough to retire former members’ capital credits without impairing the co-op’s financial state.
The lawsuit alleges 3 Rivers’ conduct has disparately harmed Native American 3 Rivers members as opposed to non-Native American members.
The filing goes on to allege 3 Rivers’ apparent failure to retire capital credits is “one of many examples of disparate treatment” by the co-op of members of the Browning Exchange. The plaintiffs claim, for example, that 3 Rivers failed to use Federal Communications Commission funds to upgrade service for Browning Exchange members and instead used the money to upgrade from copper cable to fiber optic cable for all other members because “copper was good enough” for the Browning Exchange. In another instance, 3 Rivers obtained excess revenue in part by including Browning Exchange members in its calculations pertaining to new accounting for consumer broadband-only loops (CBOL), the plaintiffs say. Per the suit, CBOL was never furnished for Browning Exchange members.
The lawsuit looks to represent all Native Americans who are, or were, members of 3 Rivers’ Browning Exchange who own capital credits in 3 Rivers and do not owe the co-op money in excess of the sum of their capital credits. The complaint states that the class includes more than 2,000 former 3 Rivers members.
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