In 2017, Neighbors for Better Water (NFBW) was formed by concerned residents in East Palo Alto who are in the Palo Alto Park Mutual Water Company district. Many of these residents had experienced illegal charges and rude treatment from the staff of the water company, and were very unhappy with the quality of the water. Additionally, when they brought these concerns shareholder meetings, they discovered that the company was run by one family, and they had very little interest to change.
Shareholder Meeting September, 2017
In September of 2017, NFBW went to the shareholder meeting with enough proxies to elect a new board. Board president Fidel Alas realized that he was going to lose, and so he refused to have an election for the entire board, and instead only allow a vote for 2 board members, even though the notice for the meeting included an election for the entire board. He shut down the meeting without having an election, and the old board continued to run the company though they were all past their term of office.
Special Shareholder Meeting May, 2018
NFBW then presented a demand from a moajority of the shareholders to hold an election, and the board refused. We then went to court and the court agreed with us and forced them to have another election. The problem was, the court left board president Alas in charge of that election. In May of 2018, after two days of vote counting, the inspectors of the election declared NFBW the winners. Mr. Alas the next day threw out the result, started the count completely over with his own personally appointed inspectors, who threw out most of NFBW proxies for illegal reasons and declared themselves the winners.
NFBW then filed another court case to have the court decide the election. Despite state law stating that courts must set a date for such matters within 10 days of filing, the court refused, citing a lack of resources due to the governor not appointing enough judges. They then scheduled a pretrial hearing 3 months later. That date was delayed, and delayed, and delayed again. In the mean time, the previous board tried to derail the court case.
Special Shareholder Meeting August, 2019
The illigitimate board held a special shareholder meeting to change the Articles of Incorporation, and later the Bylaws, ostensibly to improve the company. The real reason was to change the schedule of voting for elections so that they could hold all new elections and declare our lawsuit moot.
At this meeting, they claimed to rewrite the Articles, turning the company into what is known as a Mutual Benefit corporation (not to be confused with a Mutual Water Company, which is what the company is, but the word Mutual means something totally different here). The problem was, state law says that Mutual Benefit companies cannot have partial votes for members, but most people in the company had just that, partial votes. The other problem the company had was that in order to change it to single votes, the company was required to get the approval of EVERY shareholder in the company, not just a minority.
The company simply ignored the law and did it anyways, claiming they had a majority of shares by proxy. When the shareholders at the meeting asked to see the proxies and count them, board president Alas and general manager Lincoln simply said no.
Shareholder Meeting December, 2019
Since our lawsuit was still pending, we were forced to again gather proxies and challenge the family for control of the company. After counting of proxies for a week, we were declared the losers by a very slim amount. After reviewing the proxies ourselves, we realized that we had, in fact, won again, but again, we were ignored.
We then filed another lawsuit challenging these results. That lawsuit was joined with the previous one, and again, our request to have a 10-day hearing, as provided by law, was denied by the courts.
We were finally granted a trial date in May of 2020, but Covid hit, the San Mateo County court system shut down all civil trials, and we waited, and waited.
Trial June, 2021
Testimony for the trial began in June of 2021. We had 3 days of testimony, then a 1 month break, then 3 days of testimony, then a 2 month break, and then 1 day of testimony. Testimony has completed, but we are now waiting for the court reporters to deliver transcripts of the testimony so our lawyers can complete the final arguments. As of Nov. 29, we have not heard from the court, and they have not told us when the transcripts will be available.