Ed FILED 2 ALAMEDA COUNTY MAY 1 2 2014 CLER THE. COURT By. SUPERIOR COURT OF STATE OF CALIFORNIA IN AND FOR THE COUNTY OF ALAMEDA PACIFICA DIRECTORS FOR GOOD GOVERNANCE, Plaimifi", vs. PACIFICA FOUNDATION RADIO, ct a1., Defendants. ORDER (1) DFNYING MOTION FOR PRELIMINARY INJ LJ COTTON: AND (2) GRANTING- DEFENDANT AND APPLICATJO FOR TEMPORARY RESTRAINING ORDER AND CROSS-ACTION Two rrlatters came on 1?egu1a1'1y for hearing on May 6, 2014 in Department 15 of the above?-entitled court, the Honorable Iculm Pct1'ou p1'e-siding: (1) the Motion for Preliminary Injunctioll by Plaintiff Paci?ca Directors for Good Gcvemance and (2) the Application for Te-111pora1y Restraining Order by Defenclant and Paci?ca Foundation Radio Tho Court has considered the papers filed in connection with these matters, the -a1*gu111cnts of? counsel, and the tcstimo11y of the witnesses who appeared at the May 6 hcaring and, good cause appearing, HEREBY ORDERS as follows. btca at R?j SYUID Duptll)? 1. Plaintiff Pacifier: Directors for Good Goverunnce?s Motion for P:-eli111inary Injunction is DEN IE1). Aecordittg to First Atneoded Complaint, PD is an unincorporated voluntary association comprised of nine individuals who are members of the board of directors PD filed this action against PPR and 12 other board members First Amended Complaint alleges causes of action for (1) Removal ol?Direo1o1's - Fraudulent and Dishonest Acts, Gross Abuse of Authority and 'l')iscretior1; (2) Removal of Directors Breach of? Duties; (3) Removal of Directors Fraudulent and Dishonest Acts (against Defendant Tony Norrntut only); (4) Declaratory Relief; and (5) Preliminary and Pelmanent lnjunctive Relief. in this Motion PD seeks a preliininary injunction restraining Defendants from; inter cilia, (1) violating Bylaws; (2) approving or executing any board decision resulting from a violation of those Bylaws; (3) b1?eso11i11g the terms of? 21 purported January 30, 2014 entployrnent contract between PFR and its (either current or former) Executive Director Summer Reese; (4) taking any action in ?1-rthernuce ofpurported board decisions (including terminating Reese or re?l1iring CFO Raul Salvador) absent documentation ofboard approval in compliance with the Bylaws; (5) melting any further personnel decisions without proper board approval and recordstion of such decisions; (6) interfering with Recsefs l"urtl1er execution and perforrnancc of her job functions as Executive Director; and (7) [0 Ed VIBE Ell 'F?E'lal 'Dl~l SICILD suspending board participation of Detiendants Wilkinson, Norman, Roberts, Fuentes and Lamb for alleged egregious breaches of their tiduciary duty. In detertnining Whether to grant a preliminary injunction, the Court considers two interrelated factors: (1) the likelihood that plaintiff will prevail on the merits at trial; and (2) the interim harm that plaintiff would be likely to suffer if the inj unction were denied as compared to the harm defendartt would be likely so suffer if the injunction were issued. (See Smith V. Adventist Health Systemlwest (2010) 18?. Cal.App.4"? 729, 749.) Where plaintiff fails to show a reasonable lilcelihood of succeeding on the merits at trial, the Court does not reach the issue of whether the balance of harrns favors granting or denying a. preliminary injunction. (See Yu of La Verne (2011) 196 oa1.App.4?? 779, 787.) As indicated by request for injunctive relief recounted above, as well as by the subject matter of Cross-Complaint, the central issue in this case is the current employment status of (either current or former) Exectitive Director Sum_mcr Reese. The evidence in documentary and testimonial form presented to the Court in connection with this Motion reflects that Reese began acting as Interim Executive Director of PFR in 2012, and in November 2013 the PPR board voted to offer Reese the Executive Director position. 011 November 11, 2013, the board approved an agreement with Reese that is attaohedlas Exhibit 13 to the Declamtion of Margy Wilkinson ?led on April 25, 2.014 (hereina?er .?thc ET STCIJQ Wilkinson Declf?). That November ll, 2013 agreement (hereinafter ?the November agreement?) was signed by Reese and by Richard Uzell on behalf of the board on November 15, 2013 and contained a number of terms that are particularly material to this Motion. "First, the November agreement offered Reese I the Director position for a three-year term beginning December 1, 2013 ?subject to the completion of a check as approved by the The offer would remain open until December 1, 2013. Second, it C011l'.a.l116C1 an arbitration agreement. in which the parties agreed to arbitrate all disputes ?between Paciftca. and you arising o11t of your employment or the tennination of your ernploynientf? Tliird, it provided that it ?may not be modifietl or changed except by another written agreement between us, signed by you and by the Pacifica National Board. Secretary." The evidence at the hearing was undisputed that the bacltg1'o'u11d check of Reese was not completed by December l, 2013. Reese testified that the background check took approximately two months to complete, until sometime in January 2014, during which time she was repea.ted1y asked to track down old eniploynient contacts. On January 30, 2014, Reese signed an employment contract (hercinatter ?the January agreement?) that was also signed by Acting Chair Heather? Gray and Board Secretary Richard Uzell, both of whom are also members of PD. The Janttary agreement differs from the November agreement in several tnateiial W58 817 'F?E?i~l respects. Fundamentally, it makes no reference to a background check. Perhaps even more sig11i?ca11tly, it provides that during Reese?s probat:ioI1a1?y period, Reese could only be terminated for cause; that she was not an at-will employee as of January 30, 2014; and that if terminated during the probationary period, she would be given a six-rnonth severance payment. The November agreement contained no such terms. PFR established that the board never authorized Gray or Uzell to enter the January agreement, the board never ratified that a.g1*ee1nent, and in fact the majority of the board expressly rejected the January agreement a.t its meeting on February 7, 2014. PD and Reese contend that no board authorization or rati?cation of the January agreement was required because it simply restated the terms of the November agreement. However, as discussed above, the January agreement contained several terms that were significantly and materially different from the "November agreement, and PD and Reese have not presented any evidence that the board ever authorized or rati?ed those different terms. PPR held a regular board meeting (as provided i_n /-?trtiele Six, Section 4 of the Bylaws) on February 7, 2014. At that meeting, hoard meinber l-leather Gray provided the board with a surnmary of Reese"?s background check, but not the background check itself. (A copy of the material provided by Gray is attached as Exliibit to the Wilkins Decl.) At an executive session of the board on February 10, the board passed a motion to require Reese and/or I--Ieather Gray l.o ?3cl ldclE:EIZ'[ 171133 ET 'F?31d X6.-I aotaaens: provide the board with Reese's complete personnel ?le and ba.ckg1*ouI1d chock within 10 days, and to restrict Reese?s authority to act as Exectitive Director until further notice. (See, Declaration of Carolyn Birden, ?led by PD on April 15 2014) it is not reasonably disputed Ihat Reese and/or Gray did not provide Reese?s ?complete personnel tile and check" to the board 10 days of February 10, 2014, and that the board did not vote to approve background check, as required by the November agreement. PD and/or Reese contend, inter alto, that (1) Reese could not have provided her ?complete b?1clcg,round cl1ec1-1? to the board, beoatlsc she didn?t have it in "her possession, and further that it wash?: customary for a. ?complete background cl1ecl<;? to be submitted to the board for consideration becatlsc of job applicant's right to privacy in that (2) the reason the of the board was disinclined to approve her backgi-cund check was because she had no Social Security Nu1nlJer based on her religious beliefs. and that if the board had consulted with or followed the advice of its employment counsel, the board would have realized any aclverse decision based on Reese's failure to obtain a. Social Security Number would constitute actionable eniploylnent. r1iscrimination_; and (3) any action taken by the board since January 30, 2014 has been invalid because board member Tony Norman is a znember of the District of Colu1nbia?s Advisory VIBE ET SICLL3 Bd Neigliborhood Commission, and thus ineligible to serve on the board pursuant to Article Five, Section l(B) ofthe Bylaws. Addressing the third issue ?rst, Article Five, Section '1 (B) of the Bylaws prohibit a person from serving on the board if he or she ?holds any clected or appointed public office at any level of The Court heard unrebutted testimony 'li*om Defendallt Brian Edwards-Tiekeit that; the board had considered whether Tony l\lorman held an ?elected or appointed public office? in early 2.013. The board concluded that he did not, because the District of Columbia.?s Advisory Neighborhood Commission was not a ?public of?ce,? based on the fact that the Adviscry Neighborhood Commission had no authority to taltc any a.c'tio11s itself, only to recommend actions to be taken by the District of Columbia. Therefore, PD has not demonstrated a likelihood of prevailing on a claim that l\lorman?s status as a board member invalidated any board. decisions on or after Ja_11uary 30, 2014, i_nc1uding the decision on February 9, 20l.4 to elect Delendarit Margy Wilkins as Chair of the board. As for arguments about why a ?complete background check? was not provided to the board, and whether it was advisable for the board to consider Reese?s lack of Social Security Number as a basis for its decisions (if indeed the board did so), those arguments do not demonstrate a likelihood that PD will prevail on any claims that the board?s actions in February 2014 were invalid or constituted a breach of board members? duties or abuse of autliority. The VIEE ET K63 S1813 M883 November agreement made Reese's employment subject to ?the completion of a ba.c-ltground check as approved by the and the of the board voted to require Reese and/01' Heather Gray to provide a ?'?complete bac.l