News

Court orders May meeting for East Palo Alto water company board elections

Related hearing to evaluate proxy forms scheduled for April 18

A coalition of East Palo Alto residents who are unhappy with the management of the Palo Alto Park Mutual Water Company and unsuccessfully pushed for an election last September have succeeded in obtaining a court order mandating the election.

The coalition, called "Neighbors for Better Water," organized in advance of the private mutual water company's annual shareholders' meeting last September to collect the requisite number of proxies needed to elect a slate of five new board members. Among the reasons members have cited for why they want new leadership on the board are concerns with the company's water quality, which reportedly has elevated manganese and aluminum levels, and with the company's practice of charging "impact" or "assessment" fees they feel are unfairly large or arbitrary.

But at the last annual meeting on Sept. 23, coalition members say, the board announced that only two of the five board seats were up for election. The coalition members said all five seats should be filled by election; they did not agree to the board's terms and did not submit their original proxies to be counted.

Last month, East Palo Alto resident Irene Laudeman - who, by proxy, holds nearly 700 shares of the water company - filed a lawsuit with the San Mateo County Superior Court, asking for the court to require the water company board to hold a special meeting at which all board members would be up for election.

In a court order issued March 28, the San Mateo County Superior Court directed the water company to hold a shareholders' meeting sometime between May 4 and 11, during which members will be permitted to elect a new board.

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In the meantime, at the request of attorney Vikram Subramanian of SAC Attorneys, who represents the Palo Alto Park Mutual Water Company, the court has also agreed to hold a hearing to evaluate a number of shareholder proxies the water company alleges contain "irregularities" that may make them invalid. The water company alleges that a number of the proxies were marked with printed names instead of signatures; that three of the proxies had been forged; and that the coalition's withholding of the original proxies went against the water company's practices.

"The other party doing this petition with all the proxies didn't submit the proxies to the company secretary," said Vikram Subramanian. "There's a bylaw that says that these sort of documents need to be submitted directly to the secretary to review. They were never submitted."

Judge Gerald Buchwald ordered that the evidentiary hearing be held April 18.

The March 28 ruling by Judge Susan Greenberg ordered the shareholder meeting be held and noted that even by omitting the three allegedly forged proxies, Laudeman still has more than the 10 percent of representative proxies and shares needed to call a special meeting, and that there is nothing in the company bylaws that laid out protocols relating to the proxies.

The ruling also dismissed the defense's claims that the proxy forms did not have Spanish translations; in fact, the translations were on the reverse side of the proxy forms.

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The ruling also noted shareholders can remove directors at any time, according to state corporation code, and absent bylaws dictating how to replace those seats, it would be up to a shareholder vote. One exception, the ruling notes, is when a board vacancy is the result of a death, a resignation or the inability to serve, in which cases remaining board members can fill the position.

"If that's the will of the court and what the people want, the board of directors is ready to go to an election," Subramanian said. "They're prepared to win an election straight and fair."

The evidentiary hearing is set for 9 a.m. on Wednesday, April 18, in the San Mateo County Superior Court.

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Court orders May meeting for East Palo Alto water company board elections

Related hearing to evaluate proxy forms scheduled for April 18

by / Almanac

Uploaded: Thu, Apr 5, 2018, 2:41 pm

A coalition of East Palo Alto residents who are unhappy with the management of the Palo Alto Park Mutual Water Company and unsuccessfully pushed for an election last September have succeeded in obtaining a court order mandating the election.

The coalition, called "Neighbors for Better Water," organized in advance of the private mutual water company's annual shareholders' meeting last September to collect the requisite number of proxies needed to elect a slate of five new board members. Among the reasons members have cited for why they want new leadership on the board are concerns with the company's water quality, which reportedly has elevated manganese and aluminum levels, and with the company's practice of charging "impact" or "assessment" fees they feel are unfairly large or arbitrary.

But at the last annual meeting on Sept. 23, coalition members say, the board announced that only two of the five board seats were up for election. The coalition members said all five seats should be filled by election; they did not agree to the board's terms and did not submit their original proxies to be counted.

Last month, East Palo Alto resident Irene Laudeman - who, by proxy, holds nearly 700 shares of the water company - filed a lawsuit with the San Mateo County Superior Court, asking for the court to require the water company board to hold a special meeting at which all board members would be up for election.

In a court order issued March 28, the San Mateo County Superior Court directed the water company to hold a shareholders' meeting sometime between May 4 and 11, during which members will be permitted to elect a new board.

In the meantime, at the request of attorney Vikram Subramanian of SAC Attorneys, who represents the Palo Alto Park Mutual Water Company, the court has also agreed to hold a hearing to evaluate a number of shareholder proxies the water company alleges contain "irregularities" that may make them invalid. The water company alleges that a number of the proxies were marked with printed names instead of signatures; that three of the proxies had been forged; and that the coalition's withholding of the original proxies went against the water company's practices.

"The other party doing this petition with all the proxies didn't submit the proxies to the company secretary," said Vikram Subramanian. "There's a bylaw that says that these sort of documents need to be submitted directly to the secretary to review. They were never submitted."

Judge Gerald Buchwald ordered that the evidentiary hearing be held April 18.

The March 28 ruling by Judge Susan Greenberg ordered the shareholder meeting be held and noted that even by omitting the three allegedly forged proxies, Laudeman still has more than the 10 percent of representative proxies and shares needed to call a special meeting, and that there is nothing in the company bylaws that laid out protocols relating to the proxies.

The ruling also dismissed the defense's claims that the proxy forms did not have Spanish translations; in fact, the translations were on the reverse side of the proxy forms.

The ruling also noted shareholders can remove directors at any time, according to state corporation code, and absent bylaws dictating how to replace those seats, it would be up to a shareholder vote. One exception, the ruling notes, is when a board vacancy is the result of a death, a resignation or the inability to serve, in which cases remaining board members can fill the position.

"If that's the will of the court and what the people want, the board of directors is ready to go to an election," Subramanian said. "They're prepared to win an election straight and fair."

The evidentiary hearing is set for 9 a.m. on Wednesday, April 18, in the San Mateo County Superior Court.

Comments

member
East Palo Alto
on May 9, 2018 at 9:08 pm
member, East Palo Alto
on May 9, 2018 at 9:08 pm

There is a massive conflict of interest with "Neighbors for Better Water" who seem to be motivated more by self-interests than the water company itself, or the individuals the company serves. This group became organized by a delinquent. Their main organizer, Shannon Pekary, failed to pay his water bill for more than three years, owing the water company more than six thousands of dollars. This was recently reported in Pekary's small claims court case against the company, which is public record. He claims to have stopped paying his water bill because he was overcharged $10/month. After the water company shut off his water, he took it upon himself to tamper with a public water system to restore his own service. He came to court with "Unclean Hands." These are the same people seeking to be on the Board of the company. Nevertheless, he was able to recover only the amount which resulted from accounting errors made by the company and not what he still owes over those three years he wasn't paying his bill.


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