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LAW OFFICES OF PAUL L. KRANZ
PAUL L. KRANZ, ESQ., SBN 114999 eal
499 14" Street, Suite 300 7 FILE D
Oakland, CA 94612
kranzlaw @sbeglobal net Scour beSan Flemciocs!
Telephone: (510) 839-1200 99/28/2016
Facsimile: (510) 444-6698 BY:GARY FELICIANO,
Deputy Clerk
Attorneys for Plaintiffs
SUPERIOR COURT FOR THE STATE OF CALIFORNIA
COUNTY OF SAN FRANCISCO
JOHNA PECOT, et al. ) CASE NO. CGC-10-501168
)
Plaintiffs, ) DECLARATION OF PAUL L. KRANZ IN
) SUPPORT OF MOTION FOR LEAVE
v. ) FOR DISMISSALS TO BE FILED
)
SAN FRANCISCO DEPUTY SHERIFF’S ) Date: October 21, 2016
ASSOCIATION, a California Nonprofit ) Time: 9:30 a.m.
Corporation, et al. ) Dept.: 302
)
Defendants. ) Reservation No. 09271021-13
)
)
I, Paul L. Kranz, declare as follows in support of Plaintiffs’ Motion For Leave For
Dismissals to Be Filed.
1. Lhave personal knowledge of the information set forth herein, unless noted on
information and belief, all of which is true and correct of my own personal knowledge, and if
called upon to testify, I could and would competently testify thereto.
2. Attached hereto as Exhibit A are true and accurate copies of those pages from the
original Complaint in this action that contain the seven causes of action originally pled in this
matter.
3. Attached hereto as Exhibit B is a true and accurate copy of the July 7, 2011
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DECLARATION IN SUPPORT OF MOTION FOR FOR LEAVE FOR DISMISSALS TO BE FILEDome ND WH BF Ww YN
PRY PP NR NN DP SF Be Be Be eB Be eB ew Be
ao Aa DH FF BN KF GD GD eH IQ DWH BRB Ww HH KF OO
minute order dismissing the first five causes of action and the seventh cause of action from the
Complaint.
4, Attached hereto as Exhibit C is a true and accurate copy of the Court’s order on
Defendants’ Motion for Judgement on the Pleadings.
5. Attached hereto as Exhibit D are true and accurate copies of those pages from the
First Amended Complaint in this action that contain the remaining causes of action in this action.
6. I was present in court on June 27, 2016 when the parties appeared before the
Honorable John K. Stewart and at which time defendants agreed that this matter did not have any
claims remaining on behalf of a class.
I declare under penalty of perjury of the laws of the State of California that the foregoing
is true and correct and that this declaration was executed at Oakland, California on September
Pau L. Gur
Paul L. Kranz
27, 2016.
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DECLARATION IN SUPPORT OF MOTION FOR FOR LEAVE FOR DISMISSALS TO BE FILEDEXHIBIT AWOONONA
SUPERIOR COURT OF CALIFORNIA
COUNTY OF SAN FRANCISCO
Document Scanning Lead Sheet
Jun-30-2010 2:06 pm
Case Number: CGC-10-501168
Filing Date: Jun-30-2010 2:00
Juke Box: 001 Image: 02896738
COMPLAINT
JOHNA PECOT et al VS. SAN FRANCISCO DEPUTY SHERIFF'S ASSOCIATION, A et .
001C02896738
Instructions:
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11
of the numerous individual members of the class may be relatively small, thé expenses and
burden of individual litigation would make it difficult or impossible for individual members of
the class to redress the wrongs committed, while an important public interest will be served
by addressing the matter as a class action. The cost to the court system of adjudication of such
individualized litigation would be substantial. Individualized litigation would also present the
potential for inconsistent or contradictory ‘judgments.
139. Plaintiffs are unaware of any difficulties that are likely to be encountered in the
management of this action that would preclude its maintenance as a class action.
FIRST CAUSE OF ACTION
Breach of Contract
On Behalf of the Class
Against Defendant SAN FRANCISCO DEPUTY SHERIFF’S ASSOCIATION
140. Plaintiffs reallege Paragraphs 1-51, above, which are incorporated by reference
as if fully set forth herein.
141. The members of the Class (defined as all current and former dues-paying
members of the San Francisco Deputy Sheriffs’ Association from July 1, 2002 through the
present), including Named Plaintiffs, entered into a valid contract with Defendant SAN
FRANCISCO DEPUTY SHERIFF’S ASSOCIATION, whereby the members of the Class
agreed to increase the amount of dues each member paid to Defendant. In exchange for this
extra revenue, the Defendant agreed to manage and appropriate the dues in the manner
specified in the written document entitled “San Francisco Deputy Sheriffs’ Association
Proposal for Dues Increase.” This contract became effective immediately upon the vote by the
members of the Class to approve the increase in their biweekly dues.
142. Defendant SFDSA breached its contract with Plaintiffs and with the members
of the Class by failing to set aside in a separate fund 20% of the dues collected for the
payment of a full time salary to the SFDSA President.
143. Defendant SFDSA further breached its contract with Plaintiffs and with the
members of the Class by spending dues that were collected from the Class and that were
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CLASS ACTION COMPLAINTCw ra An B® YH DN
dedicated exclusively for the payment of a full time salary to the President of the SFDSA for
unauthorized purposes, including, but not limited to, expenditures for: (a) the personal benefit
of Defendant WONG, (b) the benefit of Defendant SFDSA Foundation, and/or © the benefit
of other individuals and entities.
144. Defendant SFDSA further breached its contract with Plaintiffs and with the
members of the Class by failing to set aside in a separate fund 12% of the dues collected for
the financing of a mortgage for the purchase of a building for SFDSA’s use.
145. Defendant SFDSA further breached its contract with Plaintiffs and with the
members of the Class by spending dues that were collected from the Class and that were
dedicated exclusively for the purchase of an office building for unauthorized purposes,
including, but not limited to, expenditures for: (a) the personal benefit of Defendant WONG,
(b) the benefit of Defendant SFDSA Foundation, and/or © the benefit of other individuals and
entities.
146. Defendant SFDSA further breached its contract with Plaintiffs and with the
members of the Class by spending dues that were collected from the Class and that were
dedicated exclusively for the payment of affiliation dues to the Operating Engineers, Local 3,
a labor organization with which SFDSA had an affiliation agreement, for unauthorized
purposes, including, but not limited to, expenditures for: (a) the personal benefit of Defendant
WONG, (b) the benefit of Defendant SFDSA Foundation, and/or © the benefit of other
individuals and entities.
147. Asa direct and proximate result of the breach by Defendant SFDSA, the
members of the Class, including the Named Plaintiffs, have suffered damages in an amount
presently unascertained, but no less than $716,345.
AIT
MITT
it
MITT
/iilt
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CLASS ACTION COMPLAINT.SECOND CLAIM FOR RELIEF
Intentional Interference with the Performance of a Contract
On Behalf of the Class
Against Defendants DAVID WONG and SAN FRANCISCO DEPUTY SHERIEFF’S
ASSOCIATION FOUNDATION
148. Plaintiffs reallege Paragraphs 1-51, above, which are incorporated by reference
as if fully set forth herein.
149. Defendant DAVID WONG and the SFDSA FOUNDATION had knowledge of
the existence of and the terms of the valid contract between Defendant SFDSA and its
members to set aside specific portions of the dues collected from the members and to spend
such specific portions exclusively on specified purposes, namely, for the payment of a full
time salary to the President of the SFDSA, for the payment of a mortgage on the purchase of
an office3 building for the use of the SFDSA, and for affiliation dues payments to the.
Operating Engineers, Local No. 3.
-150. Defendants WONG and the FOUNDATION intentionally caused the SFDSA
to fail to set aside the dues collected in separate funds as specified by the contract. In
addition, Defendants WONG and the FOUNDATION intentionally caused the SFDSA to
breach the contract by causing the SFDSA to spend the portions of the dues that had been
dedicated for specific purposes for unauthorized purposes.
151. Asa direct and proximate result of Defendant WONG’s and the
FOUNDATION’s interference with SFDSA’s performance of the contract, SFDSA breached
its contract with the Class, resulting in damages in an amount presently unascertained, but no
less than $716,345.
THIRD CLAIM FOR RELIEF
Fraud
On Behalf of the Class
Against Defendant DAVID WONG
152. Plaintiffs reallege Paragraphs 1-51, above, which are incorporated by reference
as if fully set forth herein.
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CLASS ACTION COMPLAINTBown
wn
153. As alleged with particularity above, Defendant DAVID WONG issued or
caused to be issued to members of the SFDSA the document entitled “San Francisco Deputy
Sheriffs’ Association Proposal for Dues Increase”. This document contained statements that
WONG knew to be false.
154. Defendant WONG intended for members of the SFDSA to rely on these false
statements in voting to approve an increase in their dues. The members did rely on these
statements in voting to approve the increase to their dues.
155. In order to maintain his fraudulent appropriation of SFDSA funds, Defendant
WONG made the false statements specified in Paragraphs 38 and 45-48, above. In addition,
as specified in greater detail in Paragraphs 35, 39, and 49, above, Defendant WONG
intentionally failed to disclose certain material facts concerning which he had a fiduciary duty
to disclose.
156. As a direct and proximate result of Defendant WONG’s fraudulent statements
and omissions, the Class has suffered damages in an amount presently unascertained, but no
less than $716,345.
FOURTH CLAIM FOR RELIEF
Conspiracy
On Behalf of the Class
Against Defendants DAVID WONG, MICHAEL ZEHNER, BRIAN SAVAGE,
SHEDRICK McDANIELS, and the SFDSA FOUNDATION
157. Plaintiffs reallege Paragraphs 1-51, above, which are incorporated by reference
as if fully set forth herein.
158. As alleged with particularity above, Defendants ZEHNER, SAVAGE, and
McDANIELS, and the SFDSA FOUNDATION and each of them conspired with and acted in
concert with Defendant DAVID WONG and agreed among themselves to damage the
members of the Class by depriving them of the benefits of their contract with SFDSA by
inducing the SFDSA to breach its contract.
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CLASS ACTION COMPLAINTB WN
159. Asa direct and proximate result of the aforementioned Defendants’ wrongful
acts, the Class has suffered damages in an amount presently unascertained, but no less than
$716,345.
FIFTH CLAIM FOR RELIEF
Unfair Competition, Business & Professions Code Sections 17200 et seq.
On Behalf of the Class
Against Defendants SFDSA and the SFDSA FOUNDATION
160. Plaintiffs reallege Paragraphs 19-51, above, which are incorporated by
reference as if fully set forth herein.
161. Business & Professions Code § defines “unfair competition” as including “any
unlawful, unfair or fraudulent business act or practice.”
162. As described with more specificity above, Defendant SFDSA collected from
the Class dues that had been exclusively dedicated for expenditure solely on a salary for the
SFDSA President, on the purchase of an office building, or on affiliation dues to the Operating
Engineers, Local No. 3. Defendants SFDSA and the SFDSA FOUNDATION fraudulently
spent or caused to be spent these dues for unauthorized purpose for: (a) the personal benefit of
Defendant WONG, (b) the benefit of Defendant SFDSA Foundation, and/or © the benefit of
other individuals and entities, The actions of both Defendant SFDSA and of Defendant the
SEDSA FOUNDATION constitute unfair competition within the meaning of Section 17200.
163. Asa direct and proximate result of their fraudulent business practices,
Defendant SFDSA and Defendant SFDSA FOUNDATION have wrongfully acquired from the
Class property in an amount presently unascertained, but no less than $716,345.
SIXTH CLAIM FOR RELIEF
Concealment of SFDSA Books and Records, Corporations Code §§ 6333 and 6334
On Behalf of Named Plaintiffs
Against Defendants SFDSA and DAVID WONG
164, Plaintiffs reallege Paragraphs 52-67, above, which are incorporated by
reference as if fully set forth herein.
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CLASS ACTION COMPLAINTCoe YN DH RB WHY
NN NY NY NN YY HY Be Be ew Be we ewe eB Be eR
eo A Aw BFW NSO = SF OHM AXA AR BAH FS
165. The failure of Defendants SFDSA and DAVID WONG to permit Plaintiffs to
inspect the accounting books and records of SFDSA is in violation of Corporations Code §§
6333 and 6334.
SEVENTH CLAIM FOR RELIEF
Remoyal of Directors for Cause, Corporations Code § 5223
Against Defendants DAVID WONG and BRIAN SAVAGE
166. Plaintiffs reallege Paragraphs 1-18 and 68-130, above, which are incorporated
by reference as if fully set forth herein.
167. As alleged with particularity above, Defendant DAVID WONG knowingly and
wilfully has engaged in fraudulent or dishonest acts, gross abuses of authority or discretion
with reference to the SFDSA, and acts constituting a breach of duty arising under Sections
5230 et seq. of the Corporations Code, all to the detriment of the SFDSA and all SFDSA
members, including the Named Plaintiffs.
168. As alleged with particularity above, Defendant BRLAN SAVAGE knowingly
and wilfully has engaged in fraudulent or dishonest acts, gross abuses of authority or
discretion with reference to the SFDSA, and acts constituting a breach of duty arising under
Sections 5230 et seg. of the Corporations Code, all to the detriment of the SFDSA and all
SFDSA members, inchiding the Named Plaintiffs.
PRAYER FOR RELIEF
WHEREFORE, Plaintiffs, on behalf of the Class, respectfully request that this Court:
1. Damages, according to proof,
2. Restitution to the Class of the amount of its dues that were unlawfully acquired
by Defendant SFDSA through unfair competition, pursuant to Business & Professions Code §
17203;
3. Disgorgement of income or proceeds of income of the San Francisco Deputy
Sheriffs Association and of the San Francisco Deputy Sheriffs Association Foundation, Inc.
that is derived from unfair competition.
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CLASS ACTION COMPLAINTEXHIBIT BSUPERIOR COURT OF CALIFORNIA
COUNTY OF SAN FRANCISCO
MINUTES
July 7, 2011 Department: 302
JOHNA PECOT et al Case Number: CGC-10-501168
PLAINTIFF Nature of Cause: DEFENDANTS
DAVID WONG, MICHAEL
VS. ZEHNER, BRIAN SAVAGE, and
SHEDRICK MCDANIELS, and the
SAN FRANCISCO DEPUTY SAN FRANCISCO DEPUTY
SHERIFF'S ASSOCIATION, A et al SHERIFF'S FOUNDATION'S
SPECIAL MOTION TO STRIKE
DEFENDANT CAUSES OF ACTION IN THE
COMPLAINT, REQUEST FOR
ATTORNEY FEES AND COSTS
RESERVED FOR LATER MOTION
DEFENDANTS DAVID WONG, MICHAEL ZEHNER, BRIAN SAVAGE, and
SHEDRICK MCDANIELS,and the SAN FRANCISCO DEPUTY SHERIFF'S
FOUNDATION'S SPECIAL MOTION TO STRIKE CAUSES OF ACTION IN THE
COMPLAINT, REQUEST FOR ATTORNEY FEES AND COSTS RESERVED FOR
LATER MOTION.
APPEARANCES: Paul L. Kranz, Esq. of Law Offices of Paul L. Kranz 510/549-5900
for pltfs & opposing parties; Lawrence D. Murray, Esq. of Law Offices of Murray &
Associates 673-0555 for individual defts & moving parties; Andrew J. Mailhot, Esq. of
Ongard Burtt & Louderback 433-3900 for deft San Francisco Deputy Sheriff's
Foundation.
RULING: Argued and the Court took the matter under submission. Court ruled on
defendants objections to plaintiffs evidence, sustained in part & overruled in part, order
signed.
After hearing, the Court's final ruling on the motion to strike is as follows:
Case Number: CGC-10-501168
Case Title: JOHNA PECOT et al VS. SAN FRANCISCO DEPUTY SHERIFF'S
ASSOCIATION, A et al
-l- Date: July 22, 2011
Form: C01006Defendants Special Motion to Strike the 1-5th and 7th causes of action under the anti-
SLAPP statute is granted. Each of these causes of action arise from both protected
petitioning/free speech activity (presenting the proposed Union dues increase for a vote
of the members and inducing the Union's members to vote for the increase) and
unprotected activity (misappropriation of the dues for purposes other than what was
promised). Because the gravamen of these causes of action is based on nonicidental
protected activity and well as unprotected activity, the first prong of the anti-SLAPP
analysis is satisfied. Haight Ashbury Free Clinics, Inc. v. Happening House Ventures
(2010) 184 Cal.App.4th 1539.
Defendant's argument that the second prong of the anti-SLAPP analysis is met because of
the preclusive effect of a dismissal of a related Federal Court lawsuit with prejudice as to
these Defendants fails as to the Ist, 2nd, 3rd, 4th and Sth causes of action. The Court has
reviewed the Federal Court action which is a derivative action asserting Federal Statutory
racketeering violations based upon the same facts as asserted here. However, the 7th
cause of action (Removal of Directors for Cause) is identical to one of the causes of
action in the Federal Action. Because that cause of action was dismissed with prejudice
as to the Defendants, it is likely plaintiffs would not prevail on this cause of action under
the doctrine of Res Judicata.
~ Defendants further argue that Plaintiff would likely not prevail on the 1-Sth causes of
action as they are brought long beyond the Statute of Limitations. Plaintiffs did not
address this argument in their moving papers nor at oral argument. In reviewing the
complaint and the timelines provided therein, the Court agrees that these causes of action
have been brought long beyond the statute of limitations. Accordingly, it is likely that
the Plaintiffs will not prevail on these causes of action as well.
Mr. Murray to prepare an order reflecting the Court's decision as stated above.
(302/LMG) Judge: Loretta M. Giorgi, Reporter: Karla Ellis-Davis, CSR #12998
Case Number: CGC-10-501168
Case Title: JOHNA PECOT et al VS. SAN FRANCISCO DEPUTY SHERIFF'S
ASSOCIATION, A et al
-2- Date: July 22,
2011
Form: C01006EXHIBIT CIIMA
SUPERIOR COURT OF CALIFORNIA
COUNTY OF SAN FRANCISCO
Document Scanning Lead Sheet
Sep-13-2013 10:03 am
Case Number: CGC-10-501168
Filing Date: Sep-12-2013 10:03
Filed by: KEVIN DOUGHERTY
Juke Box: 001 Image: 04200320
~ ORDER
JOHNA PECOT et al VS. SAN FRANCISCO DEPUTY SHERIFF'S ASSOCIATION,
Aetal
001004200320
Instructions:
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a
Mw BR DB HB FS
LAW OFFICES OF PAUL L. KRANZ
PAUL L. KRANZ, ESQ., SBN 114999
WILLIAM A. BARNES, SBN 114635 San Francisco County Superior Court
kranzlaw@sbcglobal.net
499 14" Street, Suite 300 SEP 1 2 2013
Oakland, CA 94612
Telephone: (510) 839-1200
Facsimile: (510) 444-6698
F THE COURT
Attorneys for Named Plaintiffs Johna Pecot, et al,
and all others similarly situated
SUPERIOR COURT FOR THE STATE OF CALIFORNIA
COUNTY OF SAN FRANCISCO
CASE NO. CGC-10-501168
[Bsspesed] ORDER RE MOTION FOR
JUDGMENT ON THE PLEADINGS
Date: April 11, 2012
Time: 9:30 a.m.
Dept: 302
JOHNA PECOT, THOMAS ARATA,
RICH OWYANG, STEPHEN TILTON,
JOSEPH LEAKE, and OSCAR TAYLOR,
Individually and on Behalf of All Others
Similarly Situated,
Plaintiffs,
v.
)
)
2
)
2
)
)
)
}
SAN FRANCISCO DEPUTY SHERIFF’S )
ASSOCIATION, a California Nonprofit)
Corporation, SAN FRANCISCO DEPUTY )
SHERIFF’S FOUNDATION, a California)
Corporation, DAVID WONG, an )
individual, MICHAEL ZEHNER, an )
individual, BRIAN SAVAGE, an )
individual, SHEDRICK McDANIELS, an)
individual, and DOES 1-100, ;
)
)
Defendants.
Defendants David Wong’s, Michael Zehner’s, Brian Savage’s, and Shedrick McDaniels’
Motion For Judgment On The Pleadings was scheduled for hearing on April 11, 2012 at 9:30
am. in Department 302. The Court, having considered said Defendants’ moving papers, and
Plaintiffs’ response thereto, issued a tentative ruling. The tentative ruling was not contested.
1
[Proposed] ORDER RE MOTION FOR JUDGEMENT ON THE PLEADINGS7 >
The Court, therefore, adopts its tentative ruling. The tentative ruling stated as follows:
Defendants David Wong’s, Michael Zehner’s, Brian Savage’s, and Shedrick McDaniels”
Motion For Judgment On The Pleadings is granted with leave to amend. Plaintiffs have properly
pled a cause of action under Cal. Corp. Code §§6333 and 6334 and the Court grants leave to
amend to allow Plaintiff the opportunity to separately state a cause of action for concealment.
The Court cannot look outside the face of the pleadings in ruling on a motion for judgment on the
pleadings. The sixth cause of action is not res judicata of the U.S. District Court case.
IT IS SO ORDERED.
T/1
Dated: f / 15 [1S
JAMES J. MCBRIDE
2
[Proposed] ORDER RE MOTION FOR JUDGEMENT ON THE PLEADINGSEXHIBIT DSUPERIOR COURT OF CALIFORNIA
COUNTY OF SAN FRANCISCO
Document Scanning Lead Sheet
Jun-27-2014 4:17 pm
Case Number: CGC-10-501168
Filing Date: Jun-27-2014 4:11
Filed by: ROSSALY DELAVEGA
Juke Box: 001 Image: 04534455
COMPLAINT
JOHNA PECOT et al VS. SAN FRANCISCO DEPUTY SHERIFF'S ASSOCIATION,
Aetal
001004534455
Instructions:
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3 7
4] FIFTH-CLAIMFOR RELIEF
5 Unfair € ition; Busi & Professions Code Sections £7200 :
6 7 On Behalf of the Class
7 - at : whi :
oe
9 +64-—Busi sc Professions Code-§-def fai: stion®-as-inchadi
10 } untawful,unfair or-fraudutent-business-actor- practice?
1] | ——162.—As described-with more specificity above; Defendant SFDSA-colected-from:
12 the-Ctass-dues that had-been exclusively dedicated for expenditure sotely-onra salary -for-the i it
13 | SFDSA-Presidentomtt ; farroffice building; ffitiationd he-6 7
14 Engineers, Local No- 3. Defendants SFBSA and the SFBSA-FOUNDATION fraudutently
15 spent-or- caused to be spent these dues for unauthorized purpose for~(a} the-personat-benefit of
|p On . e
7
18
19
20
21
22 SIXTH CLAIM FOR RELIEF
23 Concealment of SFDSA Books and Records, Corporations Code §§ 6333 and 6334
On Behalf of Named Plaintiffs
24 - Against Defendants SFDSA and DAVID WONG
25 164. Plaintiffs reallege Paragraphs 52-67, above, which are incorporated by
26 || reference as if fully set forth herein.
27
28
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AMENDED CLASS ACTION COMPLAINTCem N DN BF wWwN eH
NY NNN NY NN oe ie
ey annR SRS CSET RTE RHS es
° 9
165. The failure of Defendants SFDSA and DAVID WONG to permit Plaintiffs to
inspect the accounting books and records of SFDSA is in violation of Corporations Code §§
6333 and 6334.
EIGHTH CLAIM FOR RELIEF
Concealment
169, _ Plaintiffs reallege Paragraphs 4-18 and 53-67, above, which are incorporated by
reference as if fully set forth herein.
170. The refusal of DAVID WONG as President of the SFDSA and subsequent to
leaving the SFDSA presidency to permit Plaintiffs to inspect the accounting books and records
of SFDSA constitutes concealment,
PRAYER FOR RELIEF
WHEREFORE, Plaintiffs, on behalf of the Class, respectfully request that this Court:
1. Damages, according to proof:
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AMENDED CLASS ACTION COMPLAINT{
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i
4
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Cwm rn Du FF BN
YN NNN NNN YN SB Be Be ee ee ee
old AA SF ON fF SO we NIN DAH F&F WN SF Oo
2008, Defendant WONG sent a letter to Carl Goff, OE3 Vice President falsely stating that
SFDSA members had chosen to disaffiliate with OE3.
48. The statement contained in the May 30 bulletin that OE3 was requesting a dues
increase in the amount of $66.50 per member per month was false. The OE3 bylaws state that
the maximum amount of dues for a public employee is $53 per member per month.
49. The OE3 Vice President stated to Plaintiff JOSEPH LEAKE that OE3 had first
contacted Defendant WONG regarding the proposed dues increase in November 2007. OE3 had
also informed Defendant WONG that the dues increase would be phased in over a four year
period. Defendant WONG deliberately failed to convey this crucial information to SFDSA
members or to the Board of Directors.
50. Despite ending the affiliation, Defendants SFDSA and WONG, with the knowing
collaboration of Defendant McDANIELS, continued to thereafter require the collection of the
dues in the approximate amount of $27 per member per month that had been specifically
dedicated for submission to the Operating Engineers, Local No. 3.
51. Defendants SFDSA, WONG, and McDANIELS appropriated or knowingly
allowed to be appropriated from the SFDSA funds an amount equal to $27 per member per
month, an amount totaling no less than $304,000 as of the date of the filing of this complaint, for:
(a) the personal benefit of Defendant WONG, (b) the benefit of Defendant SFDSA Foundation,
and/or ©) the benefit of other individuals and entities. Defendant SFDSA Foundation willingly
and knowingly served as a repository of some or all of the misappropriated funds. Defendants
SFDSA, WONG, and McDANIELS took these actions with the knowledge that their actions
were inconsistent with the terms of the Proposal.
Failure to Permit Inspection of SFDSA Books and Records
52. . Paragraphs 1-18, above, are incorporated by reference and realleged as if fully set
forth herein.
53. Plaintiffs THOMAS ARATA and JOHNA PECOT and each of them were
members in good standing of defendant SFDSA and had each fulfilled all requirements for
membership in the SFDSA at the time of the transactions, or any part thereof, complained of as
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AMENDED CLASS ACTION COMPLAINTCan DH FF WN
hereinafter set forth.
54. Article III, Section 1(a)(2) of the SFDSA Constitution and Bylaws provides, “All
members in good standing shall have the right to examine the books, reports and correspondence
of the Recording Secretary or the Treasurer of the Association, upon request.”
55. Corporations Code § 6333, applicable to nonprofit public benefit corporations,
provides, “The accounting books and records and minutes of proceedings of the members and the
board and committees of the board shall be open to inspection upon the written demand on the
corporation of any member at any reasonable time, for a purpose reasonably related to such
person's interests as a member.”
56. Onor about September 12, 2007, Plaintiff ARATA delivered by certified mail to
Defendant SAVAGE, who was Treasurer of SFDSA at the time, a written request to inspect the
“books, reports and correspondence of all financial records involving the SFDSA for the past five
(5) years.” Copies of this correspondence were simultaneously transmitted via certified mail to
Defendants WONG and McDANIELS.
57. On or about September 27, 2007, Plaintiff ARATA delivered by certified mail to
Defendant WONG via certified mail another written request renewing his demand to be allowed
to inspect the SFDSA financial records for the previous five years.
58. | Atthe SFDSA general membership meeting on or about October 10, 2007,
Plaintiffs ARATA and PECOT both inquired of the SFDSA Board of Directors why the SFDSA
Treasurer had not responded to Defendant ARATA’s written requests.
59. Atthe SFDSA general membership meetings on or about November 14, 2007 and
December 12, 2007, Plaintiff PECOT renewed her request that the SFDSA Treasurer comply
with Defendant ARATA’s written demand for inspection of financial records.
60. Onor about January 14, 2008, Defendant PECOT filed written charges against
Defendants WONG and SAVAGE. The charges included the failure or refusal of defendants to
make the SFDSA financial records available for inspection to Defendant ARATA.
61. | Atthe SFDSA general membership meetings on or about February 13, 2008 and
March 12, 2008, Plaintiff PECOT renewed her request to inspect the SFDSA financial records.
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AMENDED CLASS ACTION COMPLAINT© 9
62. On or about April 15, 2008, Plaintiff PECOT delivered to Defendant
McDANIELS, who was SFDSA Treasurer at that time, via certified mail an additional written
request to be allowed to examine the SFDSA books and financial records.
63. Atthe SFDSA general membership meeting on or about May 14, 2008, the chair
of the committee appointed to investigate the charges filed by Plaintiff PECOT submitted a
document to the SFDSA Executive Board, which he claimed was the investigation committees
report. The chair stated that Defendant WONG “has not done anything wrong” and that no
further action would be taken. The SFDSA Executive Board has refused to allow any members
to see the alleged report.
64. Despite occasional representations by Defendants that Plaintiffs would be allowed
to examine the SFDSA books and records, Defendants have refused to make any good faith effort
| to allow such inspection.
65. On November 8, 2008, Plaintiffs filed an action in the United States District Court
Northern District of Califomia against Defendant SFDSA for failure to permit inspection of its
books and records, in violation of Corporations Code §§ 6333 and 6334.
1 66. Subsequent to the filing of the complaint, Defendant SFDSA disclosed some of its
books and records to Plaintiffs. However, Defendant SFDSA has continued to withhold several
hundreds of pages of documents.
67. In addition, after he was voted out of office as SFDSA President, Defendant
WONG wrongfully took possession and control of several hundred additional SFDSA documents
and has refused to identify or permit inspection of the SFDSA documents in his possession.
Removal of SFDSA Officers
68. Corporations Code § 5223 provides that any officer of a public benefit corporation
may be removed from office “in case of fraudulent or dishonest acts or gross abuse of authority
or discretion with reference to the corporation or breach of any duty arising under Article 3
(commencing with Section 5230) of this chapter, and may bar from reelection any director so
removed for a period prescribed by the court.”
A. Allegations Concerning Fraudulent or Dishonest Acts
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AMENDED CLASS ACTION COMPLAINT
Preview
nu BF wW LAW OFFICES OF PAUL L. KRANZ PAUL L. KRANZ, ESQ., SBN 114999 eal 499 14" Street, Suite 300 7 FILE D Oakland, CA 94612 kranzlaw @sbeglobal net Scour beSan Flemciocs! Telephone: (510) 839-1200 99/28/2016 Facsimile: (510) 444-6698 BY:GARY FELICIANO, Deputy Clerk Attorneys for Plaintiffs SUPERIOR COURT FOR THE STATE OF CALIFORNIA COUNTY OF SAN FRANCISCO JOHNA PECOT, et al. ) CASE NO. CGC-10-501168 ) Plaintiffs, ) DECLARATION OF PAUL L. KRANZ IN ) SUPPORT OF MOTION FOR LEAVE v. ) FOR DISMISSALS TO BE FILED ) SAN FRANCISCO DEPUTY SHERIFF’S ) Date: October 21, 2016 ASSOCIATION, a California Nonprofit ) Time: 9:30 a.m. Corporation, et al. ) Dept.: 302 ) Defendants. ) Reservation No. 09271021-13 ) ) I, Paul L. Kranz, declare as follows in support of Plaintiffs’ Motion For Leave For Dismissals to Be Filed. 1. Lhave personal knowledge of the information set forth herein, unless noted on information and belief, all of which is true and correct of my own personal knowledge, and if called upon to testify, I could and would competently testify thereto. 2. Attached hereto as Exhibit A are true and accurate copies of those pages from the original Complaint in this action that contain the seven causes of action originally pled in this matter. 3. Attached hereto as Exhibit B is a true and accurate copy of the July 7, 2011 -1- DECLARATION IN SUPPORT OF MOTION FOR FOR LEAVE FOR DISMISSALS TO BE FILEDome ND WH BF Ww YN PRY PP NR NN DP SF Be Be Be eB Be eB ew Be ao Aa DH FF BN KF GD GD eH IQ DWH BRB Ww HH KF OO minute order dismissing the first five causes of action and the seventh cause of action from the Complaint. 4, Attached hereto as Exhibit C is a true and accurate copy of the Court’s order on Defendants’ Motion for Judgement on the Pleadings. 5. Attached hereto as Exhibit D are true and accurate copies of those pages from the First Amended Complaint in this action that contain the remaining causes of action in this action. 6. I was present in court on June 27, 2016 when the parties appeared before the Honorable John K. Stewart and at which time defendants agreed that this matter did not have any claims remaining on behalf of a class. I declare under penalty of perjury of the laws of the State of California that the foregoing is true and correct and that this declaration was executed at Oakland, California on September Pau L. Gur Paul L. Kranz 27, 2016. -2- DECLARATION IN SUPPORT OF MOTION FOR FOR LEAVE FOR DISMISSALS TO BE FILEDEXHIBIT AWOONONA SUPERIOR COURT OF CALIFORNIA COUNTY OF SAN FRANCISCO Document Scanning Lead Sheet Jun-30-2010 2:06 pm Case Number: CGC-10-501168 Filing Date: Jun-30-2010 2:00 Juke Box: 001 Image: 02896738 COMPLAINT JOHNA PECOT et al VS. SAN FRANCISCO DEPUTY SHERIFF'S ASSOCIATION, A et . 001C02896738 Instructions: Please place this sheet on top of the document to be scanned.C0 ON DH BP WN S 11 of the numerous individual members of the class may be relatively small, thé expenses and burden of individual litigation would make it difficult or impossible for individual members of the class to redress the wrongs committed, while an important public interest will be served by addressing the matter as a class action. The cost to the court system of adjudication of such individualized litigation would be substantial. Individualized litigation would also present the potential for inconsistent or contradictory ‘judgments. 139. Plaintiffs are unaware of any difficulties that are likely to be encountered in the management of this action that would preclude its maintenance as a class action. FIRST CAUSE OF ACTION Breach of Contract On Behalf of the Class Against Defendant SAN FRANCISCO DEPUTY SHERIFF’S ASSOCIATION 140. Plaintiffs reallege Paragraphs 1-51, above, which are incorporated by reference as if fully set forth herein. 141. The members of the Class (defined as all current and former dues-paying members of the San Francisco Deputy Sheriffs’ Association from July 1, 2002 through the present), including Named Plaintiffs, entered into a valid contract with Defendant SAN FRANCISCO DEPUTY SHERIFF’S ASSOCIATION, whereby the members of the Class agreed to increase the amount of dues each member paid to Defendant. In exchange for this extra revenue, the Defendant agreed to manage and appropriate the dues in the manner specified in the written document entitled “San Francisco Deputy Sheriffs’ Association Proposal for Dues Increase.” This contract became effective immediately upon the vote by the members of the Class to approve the increase in their biweekly dues. 142. Defendant SFDSA breached its contract with Plaintiffs and with the members of the Class by failing to set aside in a separate fund 20% of the dues collected for the payment of a full time salary to the SFDSA President. 143. Defendant SFDSA further breached its contract with Plaintiffs and with the members of the Class by spending dues that were collected from the Class and that were -26- CLASS ACTION COMPLAINTCw ra An B® YH DN dedicated exclusively for the payment of a full time salary to the President of the SFDSA for unauthorized purposes, including, but not limited to, expenditures for: (a) the personal benefit of Defendant WONG, (b) the benefit of Defendant SFDSA Foundation, and/or © the benefit of other individuals and entities. 144. Defendant SFDSA further breached its contract with Plaintiffs and with the members of the Class by failing to set aside in a separate fund 12% of the dues collected for the financing of a mortgage for the purchase of a building for SFDSA’s use. 145. Defendant SFDSA further breached its contract with Plaintiffs and with the members of the Class by spending dues that were collected from the Class and that were dedicated exclusively for the purchase of an office building for unauthorized purposes, including, but not limited to, expenditures for: (a) the personal benefit of Defendant WONG, (b) the benefit of Defendant SFDSA Foundation, and/or © the benefit of other individuals and entities. 146. Defendant SFDSA further breached its contract with Plaintiffs and with the members of the Class by spending dues that were collected from the Class and that were dedicated exclusively for the payment of affiliation dues to the Operating Engineers, Local 3, a labor organization with which SFDSA had an affiliation agreement, for unauthorized purposes, including, but not limited to, expenditures for: (a) the personal benefit of Defendant WONG, (b) the benefit of Defendant SFDSA Foundation, and/or © the benefit of other individuals and entities. 147. Asa direct and proximate result of the breach by Defendant SFDSA, the members of the Class, including the Named Plaintiffs, have suffered damages in an amount presently unascertained, but no less than $716,345. AIT MITT it MITT /iilt -27- CLASS ACTION COMPLAINT.SECOND CLAIM FOR RELIEF Intentional Interference with the Performance of a Contract On Behalf of the Class Against Defendants DAVID WONG and SAN FRANCISCO DEPUTY SHERIEFF’S ASSOCIATION FOUNDATION 148. Plaintiffs reallege Paragraphs 1-51, above, which are incorporated by reference as if fully set forth herein. 149. Defendant DAVID WONG and the SFDSA FOUNDATION had knowledge of the existence of and the terms of the valid contract between Defendant SFDSA and its members to set aside specific portions of the dues collected from the members and to spend such specific portions exclusively on specified purposes, namely, for the payment of a full time salary to the President of the SFDSA, for the payment of a mortgage on the purchase of an office3 building for the use of the SFDSA, and for affiliation dues payments to the. Operating Engineers, Local No. 3. -150. Defendants WONG and the FOUNDATION intentionally caused the SFDSA to fail to set aside the dues collected in separate funds as specified by the contract. In addition, Defendants WONG and the FOUNDATION intentionally caused the SFDSA to breach the contract by causing the SFDSA to spend the portions of the dues that had been dedicated for specific purposes for unauthorized purposes. 151. Asa direct and proximate result of Defendant WONG’s and the FOUNDATION’s interference with SFDSA’s performance of the contract, SFDSA breached its contract with the Class, resulting in damages in an amount presently unascertained, but no less than $716,345. THIRD CLAIM FOR RELIEF Fraud On Behalf of the Class Against Defendant DAVID WONG 152. Plaintiffs reallege Paragraphs 1-51, above, which are incorporated by reference as if fully set forth herein. -28- CLASS ACTION COMPLAINTBown wn 153. As alleged with particularity above, Defendant DAVID WONG issued or caused to be issued to members of the SFDSA the document entitled “San Francisco Deputy Sheriffs’ Association Proposal for Dues Increase”. This document contained statements that WONG knew to be false. 154. Defendant WONG intended for members of the SFDSA to rely on these false statements in voting to approve an increase in their dues. The members did rely on these statements in voting to approve the increase to their dues. 155. In order to maintain his fraudulent appropriation of SFDSA funds, Defendant WONG made the false statements specified in Paragraphs 38 and 45-48, above. In addition, as specified in greater detail in Paragraphs 35, 39, and 49, above, Defendant WONG intentionally failed to disclose certain material facts concerning which he had a fiduciary duty to disclose. 156. As a direct and proximate result of Defendant WONG’s fraudulent statements and omissions, the Class has suffered damages in an amount presently unascertained, but no less than $716,345. FOURTH CLAIM FOR RELIEF Conspiracy On Behalf of the Class Against Defendants DAVID WONG, MICHAEL ZEHNER, BRIAN SAVAGE, SHEDRICK McDANIELS, and the SFDSA FOUNDATION 157. Plaintiffs reallege Paragraphs 1-51, above, which are incorporated by reference as if fully set forth herein. 158. As alleged with particularity above, Defendants ZEHNER, SAVAGE, and McDANIELS, and the SFDSA FOUNDATION and each of them conspired with and acted in concert with Defendant DAVID WONG and agreed among themselves to damage the members of the Class by depriving them of the benefits of their contract with SFDSA by inducing the SFDSA to breach its contract. -29- CLASS ACTION COMPLAINTB WN 159. Asa direct and proximate result of the aforementioned Defendants’ wrongful acts, the Class has suffered damages in an amount presently unascertained, but no less than $716,345. FIFTH CLAIM FOR RELIEF Unfair Competition, Business & Professions Code Sections 17200 et seq. On Behalf of the Class Against Defendants SFDSA and the SFDSA FOUNDATION 160. Plaintiffs reallege Paragraphs 19-51, above, which are incorporated by reference as if fully set forth herein. 161. Business & Professions Code § defines “unfair competition” as including “any unlawful, unfair or fraudulent business act or practice.” 162. As described with more specificity above, Defendant SFDSA collected from the Class dues that had been exclusively dedicated for expenditure solely on a salary for the SFDSA President, on the purchase of an office building, or on affiliation dues to the Operating Engineers, Local No. 3. Defendants SFDSA and the SFDSA FOUNDATION fraudulently spent or caused to be spent these dues for unauthorized purpose for: (a) the personal benefit of Defendant WONG, (b) the benefit of Defendant SFDSA Foundation, and/or © the benefit of other individuals and entities, The actions of both Defendant SFDSA and of Defendant the SEDSA FOUNDATION constitute unfair competition within the meaning of Section 17200. 163. Asa direct and proximate result of their fraudulent business practices, Defendant SFDSA and Defendant SFDSA FOUNDATION have wrongfully acquired from the Class property in an amount presently unascertained, but no less than $716,345. SIXTH CLAIM FOR RELIEF Concealment of SFDSA Books and Records, Corporations Code §§ 6333 and 6334 On Behalf of Named Plaintiffs Against Defendants SFDSA and DAVID WONG 164, Plaintiffs reallege Paragraphs 52-67, above, which are incorporated by reference as if fully set forth herein. -30- CLASS ACTION COMPLAINTCoe YN DH RB WHY NN NY NY NN YY HY Be Be ew Be we ewe eB Be eR eo A Aw BFW NSO = SF OHM AXA AR BAH FS 165. The failure of Defendants SFDSA and DAVID WONG to permit Plaintiffs to inspect the accounting books and records of SFDSA is in violation of Corporations Code §§ 6333 and 6334. SEVENTH CLAIM FOR RELIEF Remoyal of Directors for Cause, Corporations Code § 5223 Against Defendants DAVID WONG and BRIAN SAVAGE 166. Plaintiffs reallege Paragraphs 1-18 and 68-130, above, which are incorporated by reference as if fully set forth herein. 167. As alleged with particularity above, Defendant DAVID WONG knowingly and wilfully has engaged in fraudulent or dishonest acts, gross abuses of authority or discretion with reference to the SFDSA, and acts constituting a breach of duty arising under Sections 5230 et seq. of the Corporations Code, all to the detriment of the SFDSA and all SFDSA members, including the Named Plaintiffs. 168. As alleged with particularity above, Defendant BRLAN SAVAGE knowingly and wilfully has engaged in fraudulent or dishonest acts, gross abuses of authority or discretion with reference to the SFDSA, and acts constituting a breach of duty arising under Sections 5230 et seg. of the Corporations Code, all to the detriment of the SFDSA and all SFDSA members, inchiding the Named Plaintiffs. PRAYER FOR RELIEF WHEREFORE, Plaintiffs, on behalf of the Class, respectfully request that this Court: 1. Damages, according to proof, 2. Restitution to the Class of the amount of its dues that were unlawfully acquired by Defendant SFDSA through unfair competition, pursuant to Business & Professions Code § 17203; 3. Disgorgement of income or proceeds of income of the San Francisco Deputy Sheriffs Association and of the San Francisco Deputy Sheriffs Association Foundation, Inc. that is derived from unfair competition. -31- CLASS ACTION COMPLAINTEXHIBIT BSUPERIOR COURT OF CALIFORNIA COUNTY OF SAN FRANCISCO MINUTES July 7, 2011 Department: 302 JOHNA PECOT et al Case Number: CGC-10-501168 PLAINTIFF Nature of Cause: DEFENDANTS DAVID WONG, MICHAEL VS. ZEHNER, BRIAN SAVAGE, and SHEDRICK MCDANIELS, and the SAN FRANCISCO DEPUTY SAN FRANCISCO DEPUTY SHERIFF'S ASSOCIATION, A et al SHERIFF'S FOUNDATION'S SPECIAL MOTION TO STRIKE DEFENDANT CAUSES OF ACTION IN THE COMPLAINT, REQUEST FOR ATTORNEY FEES AND COSTS RESERVED FOR LATER MOTION DEFENDANTS DAVID WONG, MICHAEL ZEHNER, BRIAN SAVAGE, and SHEDRICK MCDANIELS,and the SAN FRANCISCO DEPUTY SHERIFF'S FOUNDATION'S SPECIAL MOTION TO STRIKE CAUSES OF ACTION IN THE COMPLAINT, REQUEST FOR ATTORNEY FEES AND COSTS RESERVED FOR LATER MOTION. APPEARANCES: Paul L. Kranz, Esq. of Law Offices of Paul L. Kranz 510/549-5900 for pltfs & opposing parties; Lawrence D. Murray, Esq. of Law Offices of Murray & Associates 673-0555 for individual defts & moving parties; Andrew J. Mailhot, Esq. of Ongard Burtt & Louderback 433-3900 for deft San Francisco Deputy Sheriff's Foundation. RULING: Argued and the Court took the matter under submission. Court ruled on defendants objections to plaintiffs evidence, sustained in part & overruled in part, order signed. After hearing, the Court's final ruling on the motion to strike is as follows: Case Number: CGC-10-501168 Case Title: JOHNA PECOT et al VS. SAN FRANCISCO DEPUTY SHERIFF'S ASSOCIATION, A et al -l- Date: July 22, 2011 Form: C01006Defendants Special Motion to Strike the 1-5th and 7th causes of action under the anti- SLAPP statute is granted. Each of these causes of action arise from both protected petitioning/free speech activity (presenting the proposed Union dues increase for a vote of the members and inducing the Union's members to vote for the increase) and unprotected activity (misappropriation of the dues for purposes other than what was promised). Because the gravamen of these causes of action is based on nonicidental protected activity and well as unprotected activity, the first prong of the anti-SLAPP analysis is satisfied. Haight Ashbury Free Clinics, Inc. v. Happening House Ventures (2010) 184 Cal.App.4th 1539. Defendant's argument that the second prong of the anti-SLAPP analysis is met because of the preclusive effect of a dismissal of a related Federal Court lawsuit with prejudice as to these Defendants fails as to the Ist, 2nd, 3rd, 4th and Sth causes of action. The Court has reviewed the Federal Court action which is a derivative action asserting Federal Statutory racketeering violations based upon the same facts as asserted here. However, the 7th cause of action (Removal of Directors for Cause) is identical to one of the causes of action in the Federal Action. Because that cause of action was dismissed with prejudice as to the Defendants, it is likely plaintiffs would not prevail on this cause of action under the doctrine of Res Judicata. ~ Defendants further argue that Plaintiff would likely not prevail on the 1-Sth causes of action as they are brought long beyond the Statute of Limitations. Plaintiffs did not address this argument in their moving papers nor at oral argument. In reviewing the complaint and the timelines provided therein, the Court agrees that these causes of action have been brought long beyond the statute of limitations. Accordingly, it is likely that the Plaintiffs will not prevail on these causes of action as well. Mr. Murray to prepare an order reflecting the Court's decision as stated above. (302/LMG) Judge: Loretta M. Giorgi, Reporter: Karla Ellis-Davis, CSR #12998 Case Number: CGC-10-501168 Case Title: JOHNA PECOT et al VS. SAN FRANCISCO DEPUTY SHERIFF'S ASSOCIATION, A et al -2- Date: July 22, 2011 Form: C01006EXHIBIT CIIMA SUPERIOR COURT OF CALIFORNIA COUNTY OF SAN FRANCISCO Document Scanning Lead Sheet Sep-13-2013 10:03 am Case Number: CGC-10-501168 Filing Date: Sep-12-2013 10:03 Filed by: KEVIN DOUGHERTY Juke Box: 001 Image: 04200320 ~ ORDER JOHNA PECOT et al VS. SAN FRANCISCO DEPUTY SHERIFF'S ASSOCIATION, Aetal 001004200320 Instructions: Please place this sheet on top of the document to be scanned.© OP ADH eB we a Mw BR DB HB FS LAW OFFICES OF PAUL L. KRANZ PAUL L. KRANZ, ESQ., SBN 114999 WILLIAM A. BARNES, SBN 114635 San Francisco County Superior Court kranzlaw@sbcglobal.net 499 14" Street, Suite 300 SEP 1 2 2013 Oakland, CA 94612 Telephone: (510) 839-1200 Facsimile: (510) 444-6698 F THE COURT Attorneys for Named Plaintiffs Johna Pecot, et al, and all others similarly situated SUPERIOR COURT FOR THE STATE OF CALIFORNIA COUNTY OF SAN FRANCISCO CASE NO. CGC-10-501168 [Bsspesed] ORDER RE MOTION FOR JUDGMENT ON THE PLEADINGS Date: April 11, 2012 Time: 9:30 a.m. Dept: 302 JOHNA PECOT, THOMAS ARATA, RICH OWYANG, STEPHEN TILTON, JOSEPH LEAKE, and OSCAR TAYLOR, Individually and on Behalf of All Others Similarly Situated, Plaintiffs, v. ) ) 2 ) 2 ) ) ) } SAN FRANCISCO DEPUTY SHERIFF’S ) ASSOCIATION, a California Nonprofit) Corporation, SAN FRANCISCO DEPUTY ) SHERIFF’S FOUNDATION, a California) Corporation, DAVID WONG, an ) individual, MICHAEL ZEHNER, an ) individual, BRIAN SAVAGE, an ) individual, SHEDRICK McDANIELS, an) individual, and DOES 1-100, ; ) ) Defendants. Defendants David Wong’s, Michael Zehner’s, Brian Savage’s, and Shedrick McDaniels’ Motion For Judgment On The Pleadings was scheduled for hearing on April 11, 2012 at 9:30 am. in Department 302. The Court, having considered said Defendants’ moving papers, and Plaintiffs’ response thereto, issued a tentative ruling. The tentative ruling was not contested. 1 [Proposed] ORDER RE MOTION FOR JUDGEMENT ON THE PLEADINGS7 > The Court, therefore, adopts its tentative ruling. The tentative ruling stated as follows: Defendants David Wong’s, Michael Zehner’s, Brian Savage’s, and Shedrick McDaniels” Motion For Judgment On The Pleadings is granted with leave to amend. Plaintiffs have properly pled a cause of action under Cal. Corp. Code §§6333 and 6334 and the Court grants leave to amend to allow Plaintiff the opportunity to separately state a cause of action for concealment. The Court cannot look outside the face of the pleadings in ruling on a motion for judgment on the pleadings. The sixth cause of action is not res judicata of the U.S. District Court case. IT IS SO ORDERED. T/1 Dated: f / 15 [1S JAMES J. MCBRIDE 2 [Proposed] ORDER RE MOTION FOR JUDGEMENT ON THE PLEADINGSEXHIBIT DSUPERIOR COURT OF CALIFORNIA COUNTY OF SAN FRANCISCO Document Scanning Lead Sheet Jun-27-2014 4:17 pm Case Number: CGC-10-501168 Filing Date: Jun-27-2014 4:11 Filed by: ROSSALY DELAVEGA Juke Box: 001 Image: 04534455 COMPLAINT JOHNA PECOT et al VS. SAN FRANCISCO DEPUTY SHERIFF'S ASSOCIATION, Aetal 001004534455 Instructions: Please place this sheet on top of the document to be scanned.2 3 7 4] FIFTH-CLAIMFOR RELIEF 5 Unfair € ition; Busi & Professions Code Sections £7200 : 6 7 On Behalf of the Class 7 - at : whi : oe 9 +64-—Busi sc Professions Code-§-def fai: stion®-as-inchadi 10 } untawful,unfair or-fraudutent-business-actor- practice? 1] | ——162.—As described-with more specificity above; Defendant SFDSA-colected-from: 12 the-Ctass-dues that had-been exclusively dedicated for expenditure sotely-onra salary -for-the i it 13 | SFDSA-Presidentomtt ; farroffice building; ffitiationd he-6 7 14 Engineers, Local No- 3. Defendants SFBSA and the SFBSA-FOUNDATION fraudutently 15 spent-or- caused to be spent these dues for unauthorized purpose for~(a} the-personat-benefit of |p On . e 7 18 19 20 21 22 SIXTH CLAIM FOR RELIEF 23 Concealment of SFDSA Books and Records, Corporations Code §§ 6333 and 6334 On Behalf of Named Plaintiffs 24 - Against Defendants SFDSA and DAVID WONG 25 164. Plaintiffs reallege Paragraphs 52-67, above, which are incorporated by 26 || reference as if fully set forth herein. 27 28 -30- AMENDED CLASS ACTION COMPLAINTCem N DN BF wWwN eH NY NNN NY NN oe ie ey annR SRS CSET RTE RHS es ° 9 165. The failure of Defendants SFDSA and DAVID WONG to permit Plaintiffs to inspect the accounting books and records of SFDSA is in violation of Corporations Code §§ 6333 and 6334. EIGHTH CLAIM FOR RELIEF Concealment 169, _ Plaintiffs reallege Paragraphs 4-18 and 53-67, above, which are incorporated by reference as if fully set forth herein. 170. The refusal of DAVID WONG as President of the SFDSA and subsequent to leaving the SFDSA presidency to permit Plaintiffs to inspect the accounting books and records of SFDSA constitutes concealment, PRAYER FOR RELIEF WHEREFORE, Plaintiffs, on behalf of the Class, respectfully request that this Court: 1. Damages, according to proof: -31- AMENDED CLASS ACTION COMPLAINT{ y i 4 q Cwm rn Du FF BN YN NNN NNN YN SB Be Be ee ee ee old AA SF ON fF SO we NIN DAH F&F WN SF Oo 2008, Defendant WONG sent a letter to Carl Goff, OE3 Vice President falsely stating that SFDSA members had chosen to disaffiliate with OE3. 48. The statement contained in the May 30 bulletin that OE3 was requesting a dues increase in the amount of $66.50 per member per month was false. The OE3 bylaws state that the maximum amount of dues for a public employee is $53 per member per month. 49. The OE3 Vice President stated to Plaintiff JOSEPH LEAKE that OE3 had first contacted Defendant WONG regarding the proposed dues increase in November 2007. OE3 had also informed Defendant WONG that the dues increase would be phased in over a four year period. Defendant WONG deliberately failed to convey this crucial information to SFDSA members or to the Board of Directors. 50. Despite ending the affiliation, Defendants SFDSA and WONG, with the knowing collaboration of Defendant McDANIELS, continued to thereafter require the collection of the dues in the approximate amount of $27 per member per month that had been specifically dedicated for submission to the Operating Engineers, Local No. 3. 51. Defendants SFDSA, WONG, and McDANIELS appropriated or knowingly allowed to be appropriated from the SFDSA funds an amount equal to $27 per member per month, an amount totaling no less than $304,000 as of the date of the filing of this complaint, for: (a) the personal benefit of Defendant WONG, (b) the benefit of Defendant SFDSA Foundation, and/or ©) the benefit of other individuals and entities. Defendant SFDSA Foundation willingly and knowingly served as a repository of some or all of the misappropriated funds. Defendants SFDSA, WONG, and McDANIELS took these actions with the knowledge that their actions were inconsistent with the terms of the Proposal. Failure to Permit Inspection of SFDSA Books and Records 52. . Paragraphs 1-18, above, are incorporated by reference and realleged as if fully set forth herein. 53. Plaintiffs THOMAS ARATA and JOHNA PECOT and each of them were members in good standing of defendant SFDSA and had each fulfilled all requirements for membership in the SFDSA at the time of the transactions, or any part thereof, complained of as -10- AMENDED CLASS ACTION COMPLAINTCan DH FF WN hereinafter set forth. 54. Article III, Section 1(a)(2) of the SFDSA Constitution and Bylaws provides, “All members in good standing shall have the right to examine the books, reports and correspondence of the Recording Secretary or the Treasurer of the Association, upon request.” 55. Corporations Code § 6333, applicable to nonprofit public benefit corporations, provides, “The accounting books and records and minutes of proceedings of the members and the board and committees of the board shall be open to inspection upon the written demand on the corporation of any member at any reasonable time, for a purpose reasonably related to such person's interests as a member.” 56. Onor about September 12, 2007, Plaintiff ARATA delivered by certified mail to Defendant SAVAGE, who was Treasurer of SFDSA at the time, a written request to inspect the “books, reports and correspondence of all financial records involving the SFDSA for the past five (5) years.” Copies of this correspondence were simultaneously transmitted via certified mail to Defendants WONG and McDANIELS. 57. On or about September 27, 2007, Plaintiff ARATA delivered by certified mail to Defendant WONG via certified mail another written request renewing his demand to be allowed to inspect the SFDSA financial records for the previous five years. 58. | Atthe SFDSA general membership meeting on or about October 10, 2007, Plaintiffs ARATA and PECOT both inquired of the SFDSA Board of Directors why the SFDSA Treasurer had not responded to Defendant ARATA’s written requests. 59. Atthe SFDSA general membership meetings on or about November 14, 2007 and December 12, 2007, Plaintiff PECOT renewed her request that the SFDSA Treasurer comply with Defendant ARATA’s written demand for inspection of financial records. 60. Onor about January 14, 2008, Defendant PECOT filed written charges against Defendants WONG and SAVAGE. The charges included the failure or refusal of defendants to make the SFDSA financial records available for inspection to Defendant ARATA. 61. | Atthe SFDSA general membership meetings on or about February 13, 2008 and March 12, 2008, Plaintiff PECOT renewed her request to inspect the SFDSA financial records. -ll- AMENDED CLASS ACTION COMPLAINT© 9 62. On or about April 15, 2008, Plaintiff PECOT delivered to Defendant McDANIELS, who was SFDSA Treasurer at that time, via certified mail an additional written request to be allowed to examine the SFDSA books and financial records. 63. Atthe SFDSA general membership meeting on or about May 14, 2008, the chair of the committee appointed to investigate the charges filed by Plaintiff PECOT submitted a document to the SFDSA Executive Board, which he claimed was the investigation committees report. The chair stated that Defendant WONG “has not done anything wrong” and that no further action would be taken. The SFDSA Executive Board has refused to allow any members to see the alleged report. 64. Despite occasional representations by Defendants that Plaintiffs would be allowed to examine the SFDSA books and records, Defendants have refused to make any good faith effort | to allow such inspection. 65. On November 8, 2008, Plaintiffs filed an action in the United States District Court Northern District of Califomia against Defendant SFDSA for failure to permit inspection of its books and records, in violation of Corporations Code §§ 6333 and 6334. 1 66. Subsequent to the filing of the complaint, Defendant SFDSA disclosed some of its books and records to Plaintiffs. However, Defendant SFDSA has continued to withhold several hundreds of pages of documents. 67. In addition, after he was voted out of office as SFDSA President, Defendant WONG wrongfully took possession and control of several hundred additional SFDSA documents and has refused to identify or permit inspection of the SFDSA documents in his possession. Removal of SFDSA Officers 68. Corporations Code § 5223 provides that any officer of a public benefit corporation may be removed from office “in case of fraudulent or dishonest acts or gross abuse of authority or discretion with reference to the corporation or breach of any duty arising under Article 3 (commencing with Section 5230) of this chapter, and may bar from reelection any director so removed for a period prescribed by the court.” A. Allegations Concerning Fraudulent or Dishonest Acts -12- AMENDED CLASS ACTION COMPLAINT