A deal to transfer management of the Reutlinger Community, a Jewish senior home in Danville, to a secular nonprofit health care company was finalized on April 21. But plaintiffs in a lawsuit to block the merger are mounting a last-ditch effort to thwart the deal and restart negotiations.
The plaintiffs — donors, former board members and concerned family members of Reutlinger residents —suffered a setback in February when a Superior Court judge ruled they did not have standing to bring their claim.
But on Wednesday the plaintiffs filed an amended complaint, adding the Jewish Federation of the East Bay as a plaintiff, and presented a new argument to the judge.
The complaint, filed in Superior Court in Contra Costa County, claims the affiliation agreement entered into last September between Reutlinger and Eskaton, a nonprofit that manages senior homes all over Northern California, constituted a “breach of fiduciary duty,” “a breach of charitable trust” and “a breach of contract” on Reutlinger’s part.
In a new development, Larry Kamer, a spokesperson for the concerned family members and donors, said plaintiffs have uncovered contracts signed in the 1990s that show that the former owner of the Jewish senior home — the Jewish Federation of the East Bay — still maintains some control over its operations and must weigh in on decisions regarding property transfers.
The East Bay Federation, which consolidated with the San Francisco-based Jewish Community Federation in July 2019, remains a registered 501(c)3 nonprofit.
“The Federation is still alive as a legal entity, and it has the right and the obligation to review the deal,” said Kamer, a public relations professional based in Napa.
Founded in 1950 in Oakland as the Home for Jewish Parents, the senior facility was owned by the East Bay Federation until 1994, according to the plaintiffs, when it broke off and became an independent nonprofit.
In 1999 following “one of the largest and most successful capital campaigns in the history of the region’s Jewish community,” according to Reutlinger’s website, it moved to a new campus in Danville, and changed its name to The Reutlinger Community for Jewish Living, and later to The Reutlinger Community.
According to the new complaint, the East Bay Federation donated the land in Danville where the home built its facility. But the deal came with conditions, including that Reutlinger “would not sell, transfer or encumber the Danville property without prior written consent of the Federation.”
“It was a further condition of that transfer that should Reutlinger ‘ultimately [be] unable to continue the operation of the business of the New Home [Reutlinger], then Federation shall have the right to assume operation of the New Home or to assume ownership of the New Home,’” the complaint says.
Though the East Bay Federation basically ceased operations last summer, IRS filings show it remains a registered, tax-exempt nonprofit in the State of California with an Employer Identification Number and a spot on the IRS’ Publication 78 Data List, a list of organizations that can legally receive tax-deductible contributions.
Kamer says the deal with Eskaton cannot be done “until the East Bay Federation is consulted and given additional information, which they do not have.”
Reutlinger Community CEO Jay Zimmer said he could not comment, citing ongoing litigation.
The lawsuit and amended complaint follow half a year of conflict, including a Nov. 5 town hall meeting between the leadership of Reutlinger and Eskaton, and members of the Reutlinger community who feared that the home would lose its specific Jewish character under Eskaton’s management.
Reutlinger leaders, including Zimmer, have steadfastly maintained that the Jewish tone will not change under Eskaton. Zimmer published an op-ed in J. on Nov. 21 assuring readers of the same.
“Our community’s commitment to Jewish culture and heritage will not change as a result of the agreement or the affiliation,” he wrote. “Simply put, this affiliation provides our community with the best chance of success for the foreseeable future,” including a $5 million commitment to capital upgrades.
After the state attorney general approved the deal in March, the California Department of Social Services had to approve the license transfer, which it did last week, closing the deal on April 21.
The two companies celebrated in a press release issued Wednesday, announcing, “Eskaton and The Reutlinger Community Finalize Affiliation to Expand Services and Enhance Lives of Older Adults in Northern California.”
“The mission and values of Eskaton and The Reutlinger Community are very compatible,” Eskaton CEO Todd Murch said in the release. “And we are eager to embark on this strategic partnership to improve the lives of seniors throughout Northern California.”
But Kamer believes they spoke too soon. He would like the judge, who ruled against the plaintiffs in February, to change course and put an injunction on the deal, bringing Reutlinger and Eskaton back to the negotiating table.
“They would like to believe that it’s finalized,” Kamer said. “Our view is that it’s improper for this deal to be finalized until the East Bay Federation is consulted and given additional information.”
The lawsuit plaintiffs “have parents at Reutlinger, and have a personal concern” over what happens to the home, Kamer said. “They just want this to be done the right way.”