Motion for Writ in Andrea Spears vs. Health Net of California Inc| Trellis.Law

On April 05, 2017 a Party Discovery was filed involving a dispute between All Others Similarly Situated, Arana, Tomas R., On Behalf Of Herself And On Behalf Of All Persons Similarly Situated, Spears, Andrea, and Does 1-50, Health Net Of California Inc, for (Other Employment Complaint Case) in the District Court of Sacramento County.

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1 TIMOTHY J. LONG (STATE BAR NO. 137591) California:
tilong@,oiTick.com
2 NICHOLAS J. HORTON (STATE BAR NO. 289417) Superior Court Of
nhoiton(a),orrick.com
3 ORRICK, HERRINGTON & SUTCLIFFE LLP 12/12/2018
400 Capitol Mall, Suite 3000
4 Sacramento, CA 95814-4497 , Depjty
Telephone: +1916 447 8299 Castt Mutnbtti".
5 Facsimile: +1 916 329 4900
34-2017-00210561
6 Attorneys for Defendant
HEALTH NET OF CALIFORNIA, INC.
7

8 SUPERIOR COURT OF THE STATE OF CALIFORNIA

9 COUNTY OF SACRAMENTO

10 ANDREA SPEARS, an individual, on behalf Consolidated Case No. 34-2017-00210560-
of herself and on behalf of all persons CU-OE-GDS
11 similarly situated.
Plaintiff DECLARATION OF TIMOTHY J.
12
LONG IN SUPPORT OF DEFENDANT
V. HEALTH NET OF CALIFORNIA, INC.'S
13
OPPOSITION TO MOTION TO
HEALTH NET OF CALIFORNIA, INC., a CONTINUE HEARING DATE AND
14 California Corporation; and Does 1 through BRIEFING SCHEDULE RELATING TO
50, inclusive. CLASS CERTIFICATION
15
Defendants. Date: December 14, 2018
16 Time: 2:00 pm
Dept: 35
17 Judge: Hon. Alan G. Perkins
18 Complaint Filed: April 5, 2017
FAC Filed: June 29, 2017
19

20 TOMAS R. ARANA, on behalf of himself, all Complaint Filed: August 1,2017
others similarly situated. Consolidated Complaint Filed: Dec. 21, 2017
21
Plaintiff,
22

23
HEALTH NET OF CALIFORNIA, INC., a
24 California corporation; and DOES 1-50,
inclusive,
25
Defendant.
26

DECLARATION OF TIMOTHY J. LONG ISO OPPOSITION TO MOTION TO CONTINUE HEARING DATE
AND BRIEFING SCHEDULE RELATING TO CLASS CERTIFICATION
I, Timothy J. Long, hereby declare as follows:
1. I am an attorney duly admitted to practice before the courts ofthe State ofCalifornia
and a partner in the law firm of Orrick, Herrington & Sutcliffe LLP, attorneys of record for
4 Defendant Health Net of California, Inc. ("HNCA"). I make this declaration on personal
^ knowledge and, if sworn as a witness, could competently testify to the following facts except where
^ otherwise indicated.
^ 2. On August 8, 2018, this Court entered an order permitting Plaintiffs Andrea Spears
and Tomas Arana to file a class certification motion by December 14, 2018. This order further
9 provides that HNCA may bring a "motion as to why the case should not be certified as a class
10 action and/or proceed as a PAGA action" (the "PAGA Motions") by that same date. This order
^' continued previously set briefing deadlines for these motions. A true and correct copy of this order
is attached hereto at Exhibit A
11

3. On November 19,2018, HNCA filed a Renewed Motion for Summaiy Adjudication
(the "Renewed MSA"). The Renewed MSA seeks adjudication in HNCA's favor of four claims
asserted by Plaintiffs under their Second Cause of Action, as set forth in their Consolidated

17 Complaint. Specifically, HNCA's Renewed MSA seeks. adjudication as to whether HNCA

18 properly excluded a cash benefit paid to Ms. Spears by her health plan from Ms. Spears' regular
rate of pay when calculating her overtime pay. HNCA's renewed MSA also sought adjudication
^^ as to whether HNCA properly treated what are Icnown as SPOT Bonuses, ACA Incentive Payments,

21 and Wellness Incentive Payments when calculating Mr. Arana's overtime pay. A true and con'ect

22 copy of the Memorandum of Points and Authorities submitted to the Court in support of this
motion, with relevant portions underlined for the Court's reference, is attached hereto as Exhibit B.
4. Plaintiffs' meal and rest period claims are not at issue in the Renewed MSA
5. HNCA personally served the Renewed MSA on November 19, 2018.
6. On November 27, 2018, counsel for Spears contacted my office and requested that
HNCA stipulate to continue the hearing and briefing schedule for the class certification and PAGA
97
' Motions.
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~~ DECLARATION OF TIMOTHY J. LONG ISO OPPOSITION TO MOTION TO CONTINUE HEARING DATE
AND BRIEFING SCHEDULE RELATING TO CLASS CERTIFICATION
J 7. On November 29, 2018, HNCA declined this request, as there is no reason the class
2 certification and PAGA Motions hearing and briefing cannot proceed in parallel to the Renewed
2 MSA.
8. On December 3, 2018, I deposed Mr. Arana in this matter. At the deposition, I
4
reached a stipulation with Mr. Arana's counsel regarding certain claims which Mr. Arana is no
5
g longer pursuing in this litigation. Specifically, Mr. Arana's counsel and I stipulated that Mr. Arana

7 was not pursuing any claims that HNCA failed to properly calculate employees' regular rate of pay.
„ We memorialized this stipulation on the record. A true and correct copy of the relevant portions of
o
9 Mr. Arana's deposition transcript are attached hereto as Exhibit C.
10 9. As a result of this stipulation, the Renewed MSA is contested only as to a single
11 issue: whether "cash in lieu of benefits" payments to Ms. Spears were properly excluded from her
12 regular rate pursuant to the Fair Labor and Standards Act's Health-Benefits Contribution
13 Exception. See Exhibit B.
14 10. On December 5, 2018, Ms. Spears filed a "Motion to Continue Hearing Date and
15 Briefing Schedule Relating to Class Certification" and an ex parte application for an order
16 shortening time on that motion.
17 11. On December 7, 2018, HNCA filed an opposition to Ms, Spears' ex parte
,P application.
1o

19 12. The Court held a hearing on the ex parte application that same day.
20 13. At the hearing, the Court continued the briefing schedule on Plaintiffs' class
21 certification motion and HNCA's PAGA Motions by one week, such that opening briefs are now
22 due on December 21, 2018. The Court set a hearing on Ms. Spears' motion to continue the class
22. certification hearing and briefmg schedule for 2:00 p.m. on December 14, 2018, and ordered that
24 HNCA would have until 3:00 p.m. on December 12, 2018, to file an opposifion to Ms. Spears'
25 motion for a continuance. A true and correct copy of the minute order issued by the Court on
26 December 7, 2018, setting forth these rulings is attached hereto as Exhibit D.
27 I declare under the penalty of perjury under the laws of the State of California and that the
28
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DECLARATION OF TIMOTHY J. LONG ISO OPPOSITION TO MOTION TO CONTINUE HEARING DATE
AND BRIEFING SCHEDULE RELATING TO CLASS CERTIFICATION
1 foregoing is true and correct. Executed this 12th day of December, 2018.

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3 ORRICK, HERRINGTON & SUTCLIFFE LLP
4
5 By:
TIMOTHY J. L/ONG
6 Attornej/s for Defendant
HEALTH NET OF CALIFORNIA, INC.
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DECLARATION OF TIMOTHY J. LONG ISO OPPOSITION TO MOTION TO CONTINUE HEARING DATE
AND BRIEFING SCHEDULE RELATING TO CLASS CERTIFICATION
1 TIMOTHY J, LONG (STATEBARNO. 137591)
tilons@omck.com
2 NICHOLAS J. HORTON (STATE BAR NO. 289417)
nho(ton@omck.com
3 ORRICK. HERRINGTON & SUTCLIFFE LLP
400 Capitol MaJl, Suite 3000
4 Sacrainento, CA 95814^97 -• .
Telephone:/-+19-16 44%8299 •
5 PacsUflile: +1 9163294900
ANNIE H. CHEN (STATE BAR NO. 292032)
6.V
aiui)e.chen@orrick.coni
7 ORRICK. HERRINQTON & SUTCLIFFE LLP
777 South Figueroa Street, Suite 3200
8 Los Angeles, CA 90017-S8S5
Telephwie: •M-213^29-2020
9 Facsimile: +1-213-612-2499
10 Attomeys for Defendant
HEALTH NET OF CALIFORNIA, INC
11
*1* COUNSEL FOR PLAINTIFFS ON NEXT PAGE
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SUPERIOR COURT OF THE STATE OF CALIFORNIA
13
COUNTY OF SACRAMENTO
14
ANDREA SPEARS, an individual, on behalf Consolidated CaseNo. 34-2017-00210560-
15- o&herself and on behalf of all pes^ons similarly CU-OE-QDS v:,-:-;
situated,
16 Plaintiff, STIPULATION ANDLlEaOIJeS^ii^\
ORDER TO CONTINUE HEARING AND
17 V. RESETTING BRIEFING SCH£DUL£;7't:i;
RELATING TO CLASS . A:^'^^'
18 HEALTH NET OF CALIFORNIA, INC., a CERTIFICATION
California Coiporation; and Does 1 throu^ SO,
19 inclusive, Original Complaint Filed; April 5,2017 .
FACFUcd: June29,2017 i^m^^^'l.
20 Defendants. Consolidated Complamt Filed; Dec, 21,201.7
21 TOMAS R. ARANA, on behalf of himself, all
22 others sunilarly situated,
23 Plaintiff,
24 V.

25 HEALTH NET OF CALIFOIWIA. INC., a
Califonua corporation; and DOES l-SO,
26 inclusive.
27' Defendant

STIPULATION AMD IPROPOSEDI0RD6R CONTINUWO HEARING AND RESETTTNO BRIEFING SCHEDULE
BLUMENTHAL, NORDREHAUG A BHOWJ^ LLP
NORMAN B. BLUMENTHAL (SBN 068687)
2 APARAJIT BHOWMIK (SBN 248066)
VICTORIA B. RIVAPALACIO (SBN 275115)
3 2255 Calte Clara
LeJolla, CA 92037
4 ..Tel: 85S.55l.l223
Fas: 858J5IJ232
5 nonn@bamIawca.com . .
4.

"6 Attomeys for Plaintiff
ANDREA SPEARS
7 SETAREH LAW GROUP
SHAUN SETAREH (SBN 2045114)
8 H. SCOTT LEVIANT (SBN 200834)
shaun@setarehIaw.coin
9 94S4^1shire Blvd.. Suite 907
Beverly Hills,CA 90252
10 Telephone: (3 J 0) 888«7771
11 rAttomeys for Plaintiff
lO'OMASR. ARANA ^^1
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STIPULATION AND [PROPOSEDI ORDER COWnNU&lG HEARINO AND RESEmNO BRIEFIWO SCHEDULE
1 H^OTALS & griPULATION
2 L On March 28,2018, the Court sel Februaiy 1.2019,.at 10:00 a.m., as the date for
3 the bearing on PlaintifiTs Amlrea Spears* and Tomas Aiana^s Motion for Class Certification and
_ 4 .Health of Galifgnda, Inc.'s THeahh Net^ affimiative motion as to ^ y the case should lobtJbe
ceitifted as a class action and/or proceed as a PAGA action (hereinafter ''Motion for
6 Decertification*^. In its March 28''' Minute Order, the Court also set the following briefing dates:
7 o September 28, 2018 as the deadline for filmg Plahttififs' opening brief for class
e certification and Health Net's Motion for DecertificaUon;
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9 o November 27,2018 as the deadlhte for filling opposition briefs to either motion; and
10 o January 4,2018 as the deadline for filuig reply briefs in support of either motion;'
I 11 2. On July 16,2018, Plaintiff Spears filed a Motion to Contmue the Hearing Datf and
k 12 ^Briefing Schedule set out in the Court's above-mentioned March 28''' Order ("Motion to Contimre|^)
St
13 3. The Parties have met and conferred regarding Plaintiff Spears' Motion to Cdri&nSS.
14 In order to conserve judicial resources and try and resolve their differences without seel(bg Coiirt
Z'r '• 15 intervention, the parties have agreed to resolvevPlaintiff Spears' Motion to Continue as-follows,
16 subject the Court's approval: i; 'V''
^^l•::• r l j ; y^'j .

17 o Continue tbe date for the hearing on Plainiifl' Motion for Class Ceftificationjiaiui
18 Health Net's Motion for Decertification from February 1.2019 at 10:00 a.ni. to April
19 ll,2019at 10:00 a.m, ' '
20 o The deadlme for filing Plaintifis' opening brief fbr class certlficalion and/br Health
21 Net*s deceitification motion is December 14,2018.
22 o The deadline for filing opposition briefs to either motion is Februaiy 15,2019/'
23 9 The deadline for filing reply briefs in support of either motion is March 15,2019.
24 4. The Court's Clerk has informed counsel for Health Net shat the Court is available to
25 hear the Motion on April 11,2019 at 10:00 a.m.
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STIWJtATION AND [PROPOSCDJ ORDER RE HEARING ON MOTIOK FOR CIJ\SS CERTIFICATION AND MOTTON FOR
MCERTIFICATION
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Date^i: August 1,2018 BLUMENTHAL, NORDREHAUG &
3_ BHOWMIK. LLP • •
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5. By..
VICTORIA B. RIVAPALACIO
6 Attomeys fbr Plaioti!?
ANDREA SPEARS
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a Dated: August 1,2018 SETAREH LAW GROUP
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lANT

r 13
Anomeys for PlaiDtilT
TOMAS R. ARANA

Dated: August 1,2018 ORRICK, HERRINGTON & SUTCLIFFE LLP
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t6> ' ' TIMO-rafY J.LONC
Altome]& for Defcnddnt
17 HEALTH NET QF CALIFQIlNyA. INC.
isj
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snnnj^TiON AND iraorosEDi OWEA RE HEARING OH MOTWN FO» CLASS CCI^TIFK-AIION AND MOTION FOB
DECERTtnCATIOW
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3 GOOD CAUSE APPEARING, the Court hereby approves this Stipulation. The hearing
4 on Plaintiffs* Motion for Class Certification and Health Net's affinnative motion astowhy ihe
5" ease should not be cetrtiflol as a class action and/or proo^ as a PAGA action is continued to
6 April 11,2019 at 10:00 a.m.
7 The deadline filing Plamtiffs* openhig brief for class certification and/or Health Net's
8 motion as to v/hy the case should not be certified as a class action and/or proceed as a PAGA
9 action is December 14,2018.
10 The deadline for filitig opposition briefs to either moUon Is February 15,2019.

11 The deadline for filmg reply briefs in support of either motion is March 15,2019.

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13 GT IS SO ORDERED, .-v

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15 Dated:.- . Ai^M S,
16 Judge ofthe
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STIPUUTION AND IPRCfOSEO) ORDER RE HEARING ON MOTION FOR CUSS CERTIFICATION AND MOTJON FOR
' DECERTIFICATKIN
TIMOTHY J. LONG (STATE BAR NO. 137591)
tiloniz@orrick.coni
NICHOLAS ,). HORTON (STATE BAR NO. 289417)
nhorton@orrick.com .1 A S £ .-a i.'-i. n J .--

ORRICK. HERRINGTON & SUTCLIFFE LLP
400 Capitol Mall. Suite 3000
4 Sacramento, CA 95814-4497 CSV
Telephone; -M 916 447 9200
5 Facsimile: +1 916 329 4900
6 Attorneys For Defendant
HEALTH NET OF CALIFORNIA. INC.
7
8 SUPERIOR COURT OF THE STATE OF CALIFORNIA
9 COUNTY OF SACRAMENTO
10
ANDREA SPEARS, an individuaL on behalf Consolidated Case No. 34-2017-00210560-
I1 of herself and on behalf of all persons similarly CU-OE-GDS
situated.
12 Plaintiff IVIEMORANDUM OF POINTS AND
AUTHORITIES IN SUPPORT OF
13 DEFENDANT HEALTH NET OF
CALIFORNIA, INC.'S RENEWED
14 HEALTH NET OF CALIFORNIA, INC., a MOTION FOR SUMMARY
California Corporation; and Does I through 50, ADJUDICATION
15 inclusive.
Date: Feburary 4, 2019
16 Defendants. Time: 9:00 a.m.
Dept.: 54
17 Reservation No.: 2380178
18 Complaint Filed: April 5, 2017
FAC Filed: June 29, 2017
19 Consolidated Complaint Filed: Dec. 21, 2017
20 TOMAS R. ARANA, on behalf of himself, all
others similarly situated. Complaint Filed: August 1,2017
21
Plaintiff
22
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HEALTH NET OF CALIFORNIA, INC., a
24 California corporation; and DOES 1-50,
inclusive.
25
Defendant.
26
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MEMOR.'\NDUM OF l>OINTS AND .'VU VIIliRI'nilS ISO Dl-r S UKNtWED MOTION TOR SUMMARY A15.HJD1CA tlON
1 TABLE OF CONTENTS

2 Page

3 I. INTRODUCTION 5
4 II. STATEMENT OF UNDISPUTED MATERIAL FACTS 6
A. The Parties 6
5
B. The Cafeteria Benefits Plan 6
6 C. Spears' Earnings 8
7 D. Arana's Earnings 9
E. Other Earnings 9
8
1. SPOT Bonuses 10
9 2. The ACA Incentive Payment 10

10 3. Wellness Incentive Program , 11
III. PLAINTIFFS' ALLEGATIONS 12
11
A. Plaintiffs' Regular Rate Allegations 12
12 IV. SUMMARY ADJUDICATION MOTIONS MAY BE RENEWED WHEN
SUPPORTED BY NEW MATERIAL FACTS 12
^^ V. SUMMARY ADJUDICATION IS WARRANTED 13
14 A. Plaintiffs' Overtime Claim And Derivative PAGA Claim Premised On
15 Their Regular Rate Allegations Fail As A Matter Of Law 13
1. California Com1s Look To Federal Law When Determining The
Jg "Regular Rate" Of Pay For Puiposes Of Overtime Calculations 14
2. Flex Dollar Benefits Received By Spears As A Result Of Her
17 Waiver Of Medical Coverage Were Properly Excluded From Her
Regular Rate Under The Benefit-Plan Contribution Exception 15
a. Contributions Were Made Pursuant To The Plan And Were
Ig Communicated To HNCA Employees 16
b. The Primary Purpose Of The Plan Was To Provide Health
20 And Welfare Benefits To HNCA Employees 16
21 c. Benefits Were Specified Pursuant To The Plan 16
d. HNCA's Contributions Were Paid Irrevocably To Third
22 Party HNI Pursuant To A Funded AiTangement 17
23 e: Cash Benefits Provided To Participants Under the Plan
Were Incidental And Paid During The Course Of The
24 Participants' Employment As Specified In The Plan..: 18
3. HNCA Appropriately Allocated Other Forms Of Earnings In
25 Determining The Plaintiffs' Regular Rate 19
2g a. Plaintiffs' Regular Compensation Was The Baseline
Included In The Regular Rate 19
27 b. Plaintiffs' Premium Rate Compensation Did Not Need To
Be Included In The Regular Rate 19
28
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1 TABLE OF CONTENTS
(continued)
2 Page

c. Compensation For Non-Work Time Did Not Need To Be
Included In The Regular Rate 20
4
d. Benefits Payments Did Not Need To Be Included In
5 Spears's Regular Rate 20
e. Other Payments 20
6
4. Because The Underlying Overtime Claim Fails, So Too Does
7 Plaintiffs PAGA Claim Based On Such Violation 23
VI. CONCLUSION 24
8

28
1 T A B L E OF AUTHORITIES
2 Page(s)
3
Cases
4
Advanced-Tech Sec. Servs., Inc. v. Superior Courl,
5 163 Cal. App. 4th 700 (2008) 10
6 Alonzo V. Maximus, Inc.,
832 F. Supp. 2d 1122 (CD. Cal. 2011) 17
7 Amalgamated Transit Union, Local 1756, AFL-CIO v. Superior Court,
46 Cal. 4th 993 (2009) 19
8

9 Bagley V. TRW, Inc.,
JQ 73 Cal. App. 4th 1092 (1999).

]1 Graham v. Hansen,
128 Cal. App. 3d 965 (1982) 8
12 • Howard v. Octagon, Inc.,
2013 WL 5122191 (N.D. Cal. Sept. 13, 2013) .' 19
13
Huntington Memorial Hosp. v. Superior Court,
15 131 Cal. App. 4th 893 (2005) 10

Jg Kim V. Reins Int 7 California, Inc.,
18 Cal. App. 5th 1052 (2017) 19
17
Nieto V. Blue Shield of California Life & Heahh Ins. Co.,
18 181 Cal. App. 4th 60 (2010) 9

19 Prachasaisoradej v. Ralphs Grocery Co., Inc.,
2Q 42 Cal. 4th 217 (2007) 10

2j Rubin V. Wal-Mart Stores, Inc.
599 F. Supp. 2d 1176 (N.D. Cal. 2009) 17
22
Russell V. Government Employees Insurance Company,
23 2018 WL 1210763 (S.D. Cal., Mar. 8, 2018,No. 17-CV-672 JLS (WVG)) 17

24 Thomas v. Home Depot USA Inc.,
2^ 527 F. Supp. 2d 1003 (N.D. Cal. 2007) , 19

26 Statutes

27 29 U.S.C. § 207(e) ; : 10

28 29 U.S.C. § 207(e)(2) 16, 18, 19

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MEMORANDUM OF POtNTS AND AUTHORITIES ISO DEF'S RENEWED MOTION FOR SUMMARY ADJUDICATION
1 29 U.S.C. § 207(e)(3) 17,18

2 29 U.S.C. § 207(e)(4) 1,11,16

3 29 U.S.C. § 207(e)(5) 15

4 29 U.S.C. § 207(e)(6) 15

5 Fair Labor Standards Act passim

6 Code Civ. Proc. § 437c : 1,

7 Code Civ. Proc. § 1008(b) 1

8 Lab. Code §510 : 10

9 Lab. Code § 2699(a) 19

10 Lab. Code § 2699(c) 19

11 Regulations

12 29 C.F.R. § 778.208 17

13 29 C.F.R. § 778.211 9,17

14 29 C.F.R. § 778.215(a) 1, 11, 13, 16

15 Other Authorities

16 1991.03.06 DLSE Opinion Letter 17

17 Dep't of Labor Op. Letter, 2003 WL 23374600 (July 2, 2003) 9, 10

18 DLSE Manual §49.1.2 10

19 DLSE Manual § 35.7 17

20 DLSE Manual §49.1.2.4(3) 17

MEMORANDUM OF POINTS AND AUTHORITIES ISO DEF'S RENEWED MOTION FOR SUMMARY ADJUDICATION
1 I. INTRODUCTION

2 This is a renewed motion for summary adjudication brought pursuant to California Code of

3 Civil Procedure, sections 437a(f)(2) and 1008(b) as to claims asserted by Plaintiffs in their Third

4 and Seventh Causes of Action. Defendant Health Net of California, Inc. ("HNCA") is presenting

5 new and different facts in support of this renewed motion targeting Plaintiffs' claim that HNCA

6 failed to include cash benefits received by Spears when calculating the regular rate of pay when

7 computing overtime compensation. Specifically, Plaintiffs allege that HNCA did not properly

8 account for a cash benefit Speai^s received for waiving medical coverage. However, the Fair Labor

9 Standards Act (FLSA"), which California law follows, specifically excludes from the regular rate

10 the cash benefit Spears received under the Benefit-Plan Contributions Exception. See 29 U.S.C. §

11 207(e)(4); see also 29 C.F.R. § 778.215(a).

12 This motion also seeks summary adjudication for six distinct issues (Nos. 2-4 and 6-8) that

13 were indirectly addressed in HNCA's first motion for summaiy adjudication.' These issues more

14 precisely address the remainder of the regular rate claims asserted in Plaintiffs' third cause of

15 action. Further, HNCA has proffered new and different evidence on these issues which should

16 resolve any doubts in the Court's mind that summary adjudication as to Plaintiffs' "bonus" claims

17 is warranted. In fact, Plaintiffs concede two of the claims. Spears concedes she never received

18 tluee of the four payments that she has characterized as a "bonus," and the fourth (the cash benefit

19 mentioned above) is not a bonus. For his part, Arana appears to allege that HNCA did not include

20 tiu-ee "bonus" payments in his regular rate, however: (1) he does not dispute that discretionary

21 SPOT bonuses were properly excluded from the regular rate; (2) he does not dispute that non-

22 discretionary ACA Incentive payments were properly included in the regular rate; and (3) he does

23 not dispute that "wellness incentive" payments were not bonuses and were properly excluded from

24 the regulai- rate.

25 In sum, I-fNCA is entitled to summary adjudication as to Plaintiffs' claim that HNCA failed

26 to properly calculate their regular rates of pay for purposes of determining their overtime

27 ' Health Net is not challenging the same "bonus" claim issue presented in its initial motion. Nonetheless, should the
Court construe these issues as a renewal of HNCA's prior motion as to the "bonus" claim issue, HNCA has provided
28 new and different facts in support of the same
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MEMORANDUM OF POINTS AND AUTHORITIES ISO DEF'S RENEWED MOTION FOR SUMMARY ADJUDICATION
1 compensation as to the four payments addressed in this motion, and their derivative PAGA claims

2 based thereon.

3 II. STATEMENT OF UNDISPUTED IVIATERIAL FACTS

4 A. The Parties
5 HNCA, a subsidiary of Health Net, Inc. ("HNI"), has operated as a health maintenance

6 organization ("HMO") in California and provides health insurance products such as commercial

7 HMO plans and healthcare service plans. Declaration of Diane C. Rodes ("Rodes Dec"), H 2. It

8 serves "customers" - members, hosphals, medical groups, physicians, etc. - over the telephone out

9 of its call centers in Rancho Cordova and Woodland Hills, California. Id.

10 Spears worked as a non-exempt HNCA Customer Service Representative ("CSR") from

11 September 2014 to October 2016 in Rancho Cordova. UF 1.^ Arana worked was a non-exempt

12 CSR for HNCA until his promotion in November 2015 to Contact Center Analyst - an exempt

13 position. UF 2.^ At all times during his employment, Arana has worked out of the same Rancho

14 Cordova call center at which Spears worked. Id.

15 B. The Cafeteria Benefits Plan
16 Between January 1, 2001 and December 31, 2016, HNI sponsored and administered a

17 cafeteria benefits plan - a written health and welfare plan - called the "HeaUh Net, Inc. Associates

18 Benefit Program" (the "Plan"), which HNCA adopted for the benefit pf its employees. UF 3-5.

19 The Plan was governed by Section 125 of the Internal Revenue Code, was subject to the Employee

20 Retirement Income Security Act, and was overseen by a Benefits Committee. UF 7-9. As called

21 for in the Plan, the Benefits Committee had fiduciary duties and responsibilities to administer the

22 Plan for the benefit of Plan Participants, as that term is defined in the Plan, which included

23 Plaintiffs. UF 9-12.

24 HNI treated HNCA as a third party for purposes of administering the Plan, and vice versa.

25 UF 13. To that end, HNCA paid HNI the actual costs of benefits the Plan provided to Plan

26 Participants (including the cash benefits implicated by Plaintiffs' claims). UF 15-18. These Plan

27
- References to "UF" are to HNCA's Separate Statement of Undisputed Material Facts.
28 ' Since June 2017, Arana's title has been Call Center Systems Analyst - also an exempt position.
UF2.
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MEMORANDUM OF POINTS AND AUTHORITIES ISO DEF'S RENEWED MOTION FOR SUMMARY ADJUDICATION
1 Participants included Plaintiffs. Id. And, pursuant to a flinded arrangement between HNI and

2 HNCA, HNCA arranged for these monies to be deposited into an account maintained and controlled

3 by HNI as the Plan's sponsor and administrator. UF 19. These contributions made by HNCA

4 pursuant to the Plan were irrevocable - once made to HNI, HNCA was unable to recapture or divert

5 the funds for HNCA's use or benefit. UF 20. HNI, as the Plan sponsor and administrator, then

6 used these funds to pay for benefits under the plan, including the cash benefit that HNI paid to

7 Spears. UF 21-22.

8 The benefits available under the Plan, including the various coverage options and co-

9 payments a Participant was responsible for with respect to the Plan's various covered services and

10 supplies, were explained in detail to Plan Participants in the Summary Plan Descriptions (the "Plan

11 SPD") and Evidence of Coverage ("EOC") documents, which HNI provided to Plan Participants.

12 UF 23-29. The Plan provided "core" benefits to Plan Participants such as basic life and basic

13 AD&D insurance. UF 30. It also provided "optional" benefits to Plan Participants and/or their

14 dependents, such as medical and dental coverage, to select as desired based on their needs. UF 31.

15 To help pay for the cost of medical and dental coverage, and pursuant to the terms of the

16 Plan, Plan Participants received "Flex Dollars," which represented HNCA"s employer

17 contributions. UF 32-33. The exact amount of Flex Dollars a Plan Participant received varied

18 depending on the medical and dental plans he or she chose, the number of dependents covered and

19 the Participant's geographic location. UF 34. Generally, the amount of Flex Dollars a Participant

20 received was less than the total cost ofthe benefit(s) that a participant elected. UF 35. Thus, in the

21 vast majority of cases, a Plan Participant was required to contribute some amount toward the cost

22 of the benefit(s) he or she selected in the form of a paycheck deduction. UF 36-37.

23 All Flex Dollar amounts that Plan Participants received from the Plan are tracked on their

24 pay stub. UF 41. I f Flex Dollars exceeded the cost of coverage or if Plan Participants waived

25 medical and/or dental coverage, the Plan Participant received a portion of the Flex Dollars as a cash

26 benefit. UF 38. The employer contributions paid by I-INCA to HNI, as the Plan sponsor and

27 administrator, included all Flex Dollars HNCA employees received from the Plan as Plan

28 Participants, including the cash benefit that is the subject of this Motion. UF 32-33.

-7-
MEMORANDUM OF POINTS AND AUTHORITIES ISO DEF'S RENEWED MOTION FOR SUMMARY ADJUDICATION
1 That in most cases the total amount of Flex Dollars the Plan Participant received was used

2 in whole to pay for optional coverage on a pre-tax basis does not change the nature of the Flex

3 Dollars (or cash benefit) provided by the Plan. UF 46. In short. Flex Dollars, including cash

4 benefits at issue in this Motion, were Plan Benefits made available to Plan Participants. UF 45-57.

5 Similarly, that Plan benefits received by Plan Participants were tracked under the pay codes

6 "MedFlxElct" and "DenFlxElct" and "MedFlxWave" and "DenFlxWave," did not change the

7 nature of these benefits; they were Plan benefits. UF 41-42.

8 In each of the Plan years 2013, 2014, 2015 and 2016, the total cash benefits provided to

9 Plan Participants who waived dental and/or medical coverage represented a very small percentage

10 of HNCA's employer contributions to the Plan for the elected dental and/or medical coverage: 1.4%

11 in 2013, 1.3% in 2014; 0.9% in 2015; and 0.9% in 2016. UF48.

12 Throughout Spears' employment with HNCA, she elected dental coverage. UF 49.

13 However, she waived medical coverage and, as result, received the $20 cash benefit described

14 above from HNI ($20 per pay period) as the Plan sponsor and administrator pursuant to the Plan.

15 UF 49, 42, 45, 50. Ai'ana, on the other hand, did not receive this cash benefit because he elected to

16 receive both medical and dental and the cost of his coverage always exceeded the amount of Flex

17 Dollars he received. UF 51.

18 C. Spears' Earnings
19 At no time during her employment with HNCA did Spears receive any form of additional

20 compensation or remuneration that could be construed as a bonus payment. UF 56. Her earnings

21 were limited to compensation she earned based on the hours she worked (both at the regular rate

22 and premium rates) and for certain periods of non-work time, and the Flex Dollars she received

23 pursuant to the Plan. UF 52-61. The following lists all forms of earnings paid to Spears during the

24 relevant time period, as reflected in her payroll data produced in this action, none of which were

25 considered a bonus bv HNCA (UF 57):

26 o Regular Rate Compensation: Regular Hours Non-Exempt, Regular Exempt. UF 58.

27 o Premium Rate Compensation: Overtime, Holiday, Holiday Overtime. Floating Holiday,

28 Doubletime. UF 59.

-8-
MEMORANDUM OF POINTS AND AUTHORITIES ISO DEF'S RENEWED MOTION FOR SUMMARY ADJUDICATION
e Compensated Non-Work Time: Bereavement, DTP, Jury Duty, PTC LOA, PTO

2 Scheduled. PTO Sick, PTO Unscheduled, Prorated PTO Buyout. UF 60.

3 o Benefits: Medical Flex Waive. Dental Flex Elect. UF 61.

4 D. Arana's Earnings
5 The following lists all forms of compensation by Mr. Arana relevant to his claim that HNCA

6 failed to properly calculate his regular rate during the time he was a non-exempt employee, as

7 reflected in his payroll data produced in this matter. UF 63.

8 o Regular Rate Compensation: Regular Hours Non-Exempt. UF 64.

9 o Premium Rate Compensation: Overtime, Holiday, Floating Holiday Overtime,

10 Doubletime. UF65.

11 o Compensated Non-Work Time: DTP, PTO LOA, PTO Scheduled, PTO Sick, PTO

12 Unscheduled. UF 66.

13 o Benefits: Medical Flex Elect, Dental Flex Elect. UF 67.

14 o Other Earnings: Bonus - SPPT, Bonus - Pther Plans, Incentive - Pther Plans, Wellness

15 -Incentive. UF 63. 80. 87. 101.

16 The only forms of compensation Arana received that HNCA considered bonuses were the

17 bonuses he received thi'ough the SPPT Cash Awards Program ("SPPT") and incentive pay

pursuant to the ACA Customer Service & Claims Representative Pay for Performance Incentive

19 Plan (described in his payroll data as "Bonus - Pther Plans" and/or "Incentive - Pther Plans").

20 UF 62. The payments he received through the Wellness Incentive Program were not bonuses.

21 UF 97-99.

22 E. Other Earnings
23 At no time during her employment with HNCA did Spears receive any payments from

24 HNCA that could be characterized as a "bonus." UF 52-61, 81, 88, 102. She only received the

25 regular, premium rate, non-work time, and benefits payments referenced above. UF 52-61.

26 However, Arana appears to claim three types of earnings he received constitute "bonuses," which

27 should have been included in the regular rate: SPPT Cash Awards Program ("SPPT"), an

28 incentive payment pursuant to the ACA Customer Service Center & Claims Representative Pay for

-9-
MEMORANDUM OF POINTS AND AUTHORITIES ISO DEF'S RENEWED MOTION FOR SUMMARY ADJUDICATION
1 Performance Incentive Plan ("ACA Incentive Payment"), and a wellness incentive payment.

2 L SPOT Bonuses

3 Beginning January 1, 2014 and continuing thi'ough December 31, 2016, HNCA paid out

4 SPPT cash awards. UF 68. HNCA spontaneously rewarded SPPT cash awards to certain

5 employees "who demonstrale[d] exceptional behavior on the job . . . whether it [wa]s whhin or

6 beyond [the employee's] job scope." UF 69. HNCA's SPPT policy informed eligible employees

7 that bonuses were awarded without any promise or incentive being announced beforehand. UF 70.

8 There were no pre-established criteria for awarding SPPT cash awards or pre-established

9 amounts to be awarded. UF 71. Rather, the decision of when, for what reason, and in what amount

10 to award a SPPT cash award - within a range - was subject to the discretion of managers and the

11 ultimate approval of the head of the appropriate Business Unit. UF 72. Each Business Unit Leader

12 was allotted an annual SPPT cash award budget that he or she could elect to use in full, in part, or

13 not at all. UF 73.

14 Procedurally, a SPPT cash award was initiated if a manager felt that an employee on his or

15 her team should receive one. UF 74. The manager had the discretion to seek a SPPT Award for a

16 team member and in what amount. UF 75. The manager would then submit the form to the head

17 of his or her Business Unit. UF 76. The Business Unit Leader then exercised his or her discretion

18 as to v/hether to award the SPPT cash award based on the manager's recommendation (or not) and,

19 if so, in what amount. UF 77.

20 If the Business Unit Leader decided to award an employee with a SPPT cash award, the

21 amount appeared on the recipient's paycheck with the designafion "Bonus-SPPT." UF78. SPPT

22 cash awards were not included in recipients' regular rate calculation. UF 79. Mr. Arana received

23 SPPT cash awards on three occasions - each in the amount of $1,000. UF 80. These amounts.

24 were included on his wage statements dated July 5, 2013; October 25, 2013 and June 5, 2015. Id.

25 Spears did not receive any SPPT bonus. UF 81.

26 2. The ACA Incentive Payment

27 Starting January 3, 2014 and lasting through May 31, 2014, HNCA implemented an ACA

28 Incentive Plan for eligible employees. UF 83. The purpose of the ACA Incentive Plan was to

- 10-
MEMORANDUM OF POINTS AND AUTHORITIES ISO DEF'S RENEWED MOTION FOR SUMMARY ADJUDICATION
1 provide an extra reward if employees voluntarily worked overtime due to the increase in workload,

2 especially at the call centers, as a result of implementation of the Patient Protection and Affordable

3 Care Act. UF 84. Specifically, under the ACA Incentive Plan, eligible employees who worked a

4 certain number of overtime hours each month received bonus payments. UF 85. Arana received

5 ACA Incentive Payments, as reflected in his payroll data produced under the description "Incentive

6 - Pther Plans" or "Bonus - Other Plans." UF 87. These payments were included in Arana's regular

7 rate of pay. UF 86-87. Spears did not receive any payments pursuant to the ACA Incentive Plan.

8 UF88.

9 3. Wellness Incentive Program
10 From April 5, 2013 to December 31, 2016, HNCA had in place a Wellness Incentive

11 Program for eligible employees. UF 90. HNCA adopted this program because the Company

12 determined that it was in its best interest to provide employees an incentive to engage in certain

13 fitness and weight management programs. UF91. More specifically, HNCA encouraged these

14 types of activities to lower HNCA's health care costs, help to improve employees' health and

15 benefit HNCA through increased productivity. UF 92.

16 Under the Wellness Incentive Program, HNCA provided employees $35 for participating

17 in a health club and/or weight management program. UF 93. Employees who participated in the

18 Wellness Incentive Program had to make a request for a wellness incentive payment online

19 through HNCA's intranet in order to receive the $35. UF 94. If the employee's wellness

20 program of choice qualified under the incentive plan, the incentive payment was non-

21 discretionary. UF 95. Employees who requested the incentive payment with evidence of

22 participation in a qualifying wellness program received a flat monthly incentive of $35, regardless

23 of the actual cost of their qualifying program. UF 96.

24 The payments made to HNCA employees under the Wellness Incentive Program were not

25 tied to hours worked or performance; nor were they provided as any sort of incentive for

26 employees to work harder, better or more efficiently; nor were they compensation for services

27 rendered by employees. UF 97-100. Arana received payments pursuant to the Wellness

28 Incentive Program, but Spears did not. UF 101-102.

- 11 -
MEMORANDUM OF POINTS AND AUTHORITIES ISO DEF'S RENEWED MOTION FOR SUMMARY ADJUDICATION
1 III. PLAINTIFFS' ALLEGATIONS

2 A. Plaintiffs' Regular Rate Allegations
3 As part of their third cause of action for Failure to Pay Hourly Wages, Plaintiffs allege that

4 HNCA failed to pay them for all overtime hours worked. Namely, Plaintiffs contend that HNCA

5 "violated the[ir] rights . . . by failing to pay them overtime wages for all overtime hours worked . .

6 . as a result of not correctly calculating their regular rate of pay to include all applicable

7 remuneration, including, but not limited to, non-discretionary bonuses." Consol. Complaint, "f 41.

8 IV. SUMMARY ADJUDICATION MOTIONS MAY B E RENEWED WHEN
SUPPORTED BY NEW MATERIAL FACTS.
9
California Code of Civil Procedure, section 437c(f)(2) permits prior motions for summary
10
adjudication to be renewed when the moving party "establishes to the satisfaction of the court,
11
newly discovered facts or circumstances or a change of law supporting the issues reasserted in the
12
summary judgment motion." When assessing whether the moving party has met its burden under
13
Section 437c(f)(2), courts look to whether the moving party has asserted any new material facts in
14
in support of its motion. See Bagley v. TRW. Inc (1999) 73 Cal.App.4th 1092, 1097. "Whether
15
the "new" facts alleged on a motion for renewal are sufficient to satisfy the requirements of
16
section 1008, subdivision (b), is a question confided to the sound discretion of the trial court."
17
Graham v. Hansen (1982) 128 Cal. App.3d 965, 971 (upholding trial court's granfing of a
18
renewed motion for summary judgment where new facts were submitted via an interrogatory
19
response and a declaration).
20
In denying HNCA's initial motion with respect to the cash benefits paid by the Plan and
21

Case Info

Judge

David De Alba Track Judge’s New Case

Case No.

(Subscribe to View)

Document Filed Date

December 12, 2018

Case Filing Date

April 05, 2017

County

Parties

all others similarly situated Plaintiff
Arana, Tomas R. Plaintiff
Does 1-50 Defendant
Health Net of California Inc Defendant
Keith A Jacoby Attorney for the Defendant
Norman B Blumenthal Attorney for the Plaintiff
on behalf of herself and on behalf of all persons similarly situated Plaintiff
Setareh, Shaun Assignee
Shaun Setareh Attorney for the Plaintiff
Spears, Andrea Plaintiff
Timothy J Long Attorney for the Defendant
Victoria Rivapalacio Attorneys for Plaintiffs
Chaim Setareh Attorneys for Plaintiffs
William Pao Attorneys for Plaintiffs
Kyle Nordrehaug Attorneys for Plaintiffs
Ruchira Mukherjee Attorneys for Plaintiffs
Nicholas Horton Attorneys for Defendants
Stephanie Lee Attorneys for Defendants
Amanda Fitzgerald Attorneys for Defendants
Jeffrey Herman Attorneys for Plaintiffs
Howard Leviant Attorneys for Plaintiffs
Annie Chen Attorneys for Defendants
Nicholas De Blouw Attorney
Samuel Hyde Attorneys for Defendants
Rowena Santos Attorneys for Defendants
Avalon Johnson Attorneys for Defendants
Nolan Dilts Attorneys for Plaintiffs
Jonathan Sack Attorney
Charlotte James Attorneys for Plaintiffs
Aparajit Bhowmik Attorneys for Plaintiffs
Nathaniel Jenkins Attorneys for Defendants
Thomas Segal
Alexandra McIntosh Attorneys for Plaintiffs
Erin Price Attorney
Janine Menhennet Attorneys for Plaintiffs
Larry Lee Attorneys for Plaintiffs
Nicholas Rosenthal Attorneys for Plaintiffs
Kristen Agnew Attorneys for Plaintiffs
Max Gavron Attorneys for Plaintiffs
William Marder Attorneys for Plaintiffs
Michael Afar Attorneys for Plaintiffs
Dennis Murphy Attorneys for Defendants
Aaron Silva Attorneys for Defendants
Shawn Joost Attorneys for Defendants
Stacey Shim Attorneys for Plaintiffs
Ashley Blaser Attorney
Stephanie Gray Attorney

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Party Discovery: Andrea Spears vs. Health Net of California Inc

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Case Info

Parties