Federal Judge Denies Defendants’ Motions to Dismiss in Class-Action Litigation in the Northern District of California

The opinion rejects every argument made by the defendants

April 21, 2017
San Francisco, California

Judge Richard Seeborg of the U.S. District Court for the Northern District of California denied a motion to dismiss filed by Peter Singler, Jr., as well as separate motions to dismiss filed by Singler-Ernster, Inc. and Carol S. Singler.

The decision provides critical validation of the arguments advanced in the putative class action  by plaintiff – a participant  who filed the class action on behalf of the Singler-Ernster, Inc. Employee Stock Ownership Plan and Trust. The complaint challenges a series of imprudent ERISA decisions made by Peter Singler, Jr. after he assumed control of Singler-Ernster, Inc., which originally owned and operated a number of Round Table Pizza franchises in the San Francisco Bay area on the Peninsula and in the North Bay.  

One by one, Judge Seeborg considered the defendants’ arguments for dismissal and rejected them.  Judge Seeborg found that plaintiff acting on behalf Singler-Ernster, Inc. Employee Stock Ownership Plan and Trust, “has adequately stated … the elements of her claims.” Judge Seeborg also noted that “[d]efendants argument would render the provision of Rule 11 on which plaintiff relies a nullity.”  

This ruling means that the case against Peter Singler, Jr., Carol S. Singler, and Singler-Ernster, Inc. can move forward. In August 2014, Singler-Ernster, Inc. converted four of its previously franchised Round Table Pizza restaurants into Terra Vino restaurants, and plaintiff alleges that the four Terra Vino restaurants were closed by Singler-Ernster in September 2015 following transactions with the ESOP that violated the ERISA fiduciary duties of  Peter A. Singler, Jr. Singler-Ernster, Inc. and Carol S. Singler. Plaintiff alleges that Peter A. Singler, Jr. orchestrated  a self-interested sale of additional Singler-Ernster employee securities to the Singler-Ernster, Inc. Employee Stock Ownership Plan and Trust for more than fair market value in violation of ERISA’s prohibited transaction rules and used the proceeds of the sale to protect his personal financial interests. 

Cynthia Marie Vespa v Singler-Ernster Inc., et al., Case No. 16-cv-03723-R, in the U.S. District Court for the Northern District of California.

Attorneys

Practice Areas