A group of 13 people associated with the Reutlinger Community has filed a lawsuit to halt an affiliation between the 60-year-old Jewish senior home in Danville and Eskaton, a nonprofit that operates continuing-care residences.
The suit names Eskaton, all of Reutlinger’s board members, board chair Jordan Rose and President/CEO Jay Zimmer as defendants, charging them with breach of fiduciary duty of due care and breach of charitable trust. It was filed by Reutlinger trustees, donors, family members and former board members.
Filed Nov. 27 in Contra Costa County Superior Court, the lawsuit seeks a “temporary and permanent injunction to prevent consummating the affiliation agreement” with Eskaton, which is based in the Sacramento area.
That agreement had been in the works for about a year, and was approved by the Reutlinger board in September. The final hurdle is approval of the affiliation by the California attorney general, who is expected to take action sometime within the next two months.
Proponents of the lawsuit hope the filing will persuade Attorney General Xavier Becerra to at least postpone a decision.
“We have requested the attorney general to defer making any decisions,” said Don Chaiken, a Reutlinger donor and one of the plaintiffs. “The lawsuit requests that the parties be restrained from completing the transaction pending resolution of the litigation.”
In the lawsuit’s text, plaintiffs claim the affiliation (which they call a “takeover”) would result in “no accountability to the Jewish community” regarding the future of the Reutlinger Community, and would leave Eskaton, which is nondenominational, with “no obligation to further Reutlinger’s charitable purpose,” which the plaintiffs define as providing “high quality health care and social support services to seniors in a life-enhancing and stimulating environment with a commitment to Jewish values.”
The Reutlinger Community traces its roots back more than 60 years, when it was known as the Home for Jewish Parents in Oakland. In 1999 it opened its Danville facility and was renamed for a major donor, the late Jacques Reutlinger.
The suit cites language in the affiliation agreement that gives Eskaton the right to sell Reutlinger and relocate its residents to a “comparable facility” as soon as five years after the affiliation is complete. It claims the agreement offers no definition of the term “comparable facility” and also notes that once Eskaton becomes the sole member, Reutlinger would “cease to exist as an independent facility” and would then be “in the hands of an organization that does not share its vision and has not committed to ensuring Reutlinger’s survival.”
The complaint alleges the Reutlinger board “sought no input” from residents, families, donors and other stakeholders while it conducted negotiations — a sore point for Chaiken.
The Lafayette resident said the Reutlinger board and Eskaton “basically operated in secrecy as to the terms of the deal and how it would happen. They never truly asked the community to respond to the structure of this deal.”
As for the “five-year” clause, Eskaton CEO Todd Murch told J. last month that it was “pretty innocent and typical” contractual language.
“You have to allow both organizations to have some flexibility,” Murch said. “Eskaton can’t make an absolute unconditional commitment that [Reutlinger] will exist in its current form for 10, 15 or 20 years. The world changes.”
Zimmer, president and CEO at Reutlinger since 2014, told J. he could not comment until after the lawsuit has been served. However, in a Nov. 21 op-ed for J., he wrote that “no relocation is planned and none is expected. The language in the agreement referencing relocation was included to protect our residents from potential catastrophes and unlikely circumstances. In the unlikely event a relocation is ever needed, all residents would be guaranteed comparable accommodations at comparable costs, including at a facility with the same Jewish values, scope of services, quality of care and commitments in the East Bay as our community.”
Zimmer and other Reutlinger board members have stressed that every attempt was made to find a Jewish community partner with which to affiliate, and that Eskaton had been thoroughly vetted before entering affiliation negotiations
However, the suit’s plaintiffs claim that the defendants “breached their duty of care” with inadequate process, failing to secure Eskaton’s budget or business plans, its plans to eliminate Reutlinger’s deficits, refusing to share information with stakeholders and failing to properly consider alternative proposals. The suit says the defendants failed “to act in the best interest of Reutlinger in contravention to its purpose and mission.”
It is not yet known whether the lawsuit filing will influence the deliberations of the attorney general or impact the relationship between the Reutlinger Community and Eskaton.
But Chaiken hopes it will.
“There are a lot of questions unanswered,” he said.