Preview
FILED
ENDORSED
BLUMENTHAL NORDREHAUG BHOWMIK DEffidbuWLL^F' ' ^9
Norman B. Blumenthal (State Bar #068687) SUPERIOR COURT OF CALlFORHiA
Kyle R. Nordrehaug (State Bar #205975) CCUNi Y Or SACiiAl'Lni Q
Aparajit Bhowmik (State Bar #248066)
Victoria B. Rivapalacio (State Bar #275115)
2255 Calle Clara
La Jolla, CA 92037
Telephone: (858)551-1223
Facsimile: (858) 551-1232
6 Attomeys for Plaintiff
7
9
10 SUPERIOR COURT OF THE STATE OF CALIFORNIA
11 IN AND FOR THE COUNTY OF SACRAMENTO
12
13
ANDREA SPEARS, an individual, on behalf CaseNo. 34-2017-00210560-CU-OE-GDS
of herself and on behalf of all persons
14 similarly situated. CLASS ACTION
15
Plaintiff PLAINTIFF ANDREA SPEARS' OPPOSITION
16
TO DEFENDANT'S MOTION FOR SUMMARY
vs. JUDGMENT
17
18 HEALTH NET OF CALIFORNIA, INC., a Telephone Appearance
Califomia Corporation; and Does 1 through
19 50, Inclusive, Reservation No. 2313007
20 Defendants. Hearing Date: April 26, 2018
Hearing Time: 9:00 a.m.
21 Judge: Hon. Steven H. Rodda
TOMAS R. ARANA, on behalf of himself, Dept.: 54
22 all others similarly situated.
Action Filed: April 5,2017
23 Plaintiff,
24 vs.
25 HEALTH NET OF CALIFORNIA, INC., a
Califomia corporation; and DOES 1 through
26 50, inclusive.
27 Defendants.
28
PLAINTIFF'S OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION
CASE No. 34-2017-00210560
1 T A B L E OF CONTENTS
2
3 I. INTRODUCTION 1
4 II. STATEMENT OF FACTS 2
5 III. LEGAL STANDARD 4
6 IV. ARGUMENT 6
7 A. Cash In Lieu of Benefits Payments Paid to Employees Must Be Included in the Regular
Rate as a Matter of Law 4
0
o
B. Irrevocable Payments to Tmstees or Third Parties May Be Excluded from the Regular
9 Rate If the Plan Meets the Test Set Forth in 20 C.F.R. § 778.215(a) 7
10 C. Cash-In-Lieu Payments to Plaintiff Should Not Have Been Excluded from the Regular
Rate by Defendant 8
11
1. The "MedFlxWave" Payments Are Cash in Lieu Benefits the Ninth Circuit Had
12 "No Trouble" Concluding Were Not Properly Excluded from the Regular Rate of
Pay Pursuant to § 207(e)(4) 8
13
2. Whether "DenFlxElect" Payments Should Be Included in the Regular Rate Raises
14 a Different Issue Requiring Analysis of Whether the Plan is Bona Fide 8
15 3. Defendant's Motion Erroneously Attempts to Apply the Test for Exclusion of
Irrevocable Benefits Payments to Cash In Lieu of Benefits 9
16
4. Whether the Plan is Bona Fide Is Irrelevant to Whether Cash In Lieu Payments
17 Can Be Excluded from the Regular Rate 9
18 D. Defendant's Motion for Summary Adjudication Should Be Denied Based on the Failure
to Provide Relevant Discovery 12
19
V. CONCLUSION 13
20
21
22
23
24
25
26
27
28
PLAINTIFF'S OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION
CASE No. 34-2017-00210560
1 TABLE OF AUTHORITIES
2
3 Cases:
4 Albermont Petroleum, Ltd. v. Cunningham,
186Cal.App.3d84(1960) 2
5
Alder Cty. of Yolo,
6 2018 U.S. Dist. LEXIS 9987 (E.D. Cal. Jan. 22, 2018) 7
7 Alvarado v. Dart Container Corp. of Cal.,
4 Cal. 5th 542 (2018) 4-5
Brantley v. Pisaro
9 42 Cal.App.4th 1591 (1996) 2
10 Brinker Restaurant Corp. v. Superior Court,
53 Cal.4th 1004 (2012) 4
11
D Arnica v. Board of Medical Examiners,
12 11 Cal.3d 1 (1974) 4
13 Flores v. City of San Gabriel,
824 F.3d 890 (9th Cir. 2016) 1,2,6-11
14
Huntington Mem'l Hosp^ v. Superior Court,
15 131 Cal. App. 4th 893 (2005) 5
16 Huyck V. Limitless, Ltd^ Liab. Co.,
No. 3:15-CV-01298-BR,
17 2016U.S. Dist. LEXIS 131311 (D. Or. Sep. 26, 2016)) 1
18 Martinez v. Combs,
49Cal.4th 35 (2010) 4
19
20 Other Authority, Statutes, Rules, and Regulations:
21 29 C.F.R. § 778.215 1, 7, 8, 10, 12-13
22
23
24
25
26
27
28
PLAINTIFF'S OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION
CASE No. 34-2017-00210560
1 I. INTRODUCTION
2 Plaintiff Andrea Spears ("Plaintiff) opposes the motion for summary adjudication (the "Motion")
3 filed by Defendant Health Net of Califomia, Inc. ("Defendant") of Plaintiff s claim that Defendant failed
4 to include cash in lieu of benefit payments in the overtime wage payments paid to Plaintiff The Ninth
5 Circuit in Flores v. City of San Gabriel recently held that these cash-in-lieu ofbenefits payments cannot be
6 excluded under § 207(e)(4) ofthe Fair Labor Standards Act (the "FLSA"). The law is so clear on this point
7 that the Ninth Circuit held that the employer who failed to include cash-in-lieu payments in the regular rate
8 lacked good faith by failing to make the proper calculation. Flores v. City of San Gabriel, 824 F.3d 890,
9 90)5 {9\![\Cv[.l^\€); see also Huyckv. Limitless. Ltd^ Liab. Co., 2016 U.S. Dist. LEXIS 131311, at * 19 (D.
10 Or. Sep. 26, 2016)(failing to include cash-in-lieu payments in regular rate lacked good faith). Defendant's
11 motion is based on conflating cash in lieu ofbenefits with payments made irrevocably to a third party for
12 benefits.
13 Cash in lieu ofbenefits paid by an employer directly to an employee are a completely different kind
14 of compensation from benefits payments paid by an employer directly to a trustee or third party. Defendant
15 relies on 29 U.S.C. § 207(e)(4), which provides that the regular rate shall not include "contributions
16 irrevocably made by an employer to a trustee or third person pursuant to a bona fide plan for
17 providing...health insurance." The cash payments at issue here, however, are payments of $20 per pay
18 period paid directly to Plaintiff in lieu of health insurance. Identical payments were at issue in Flores, where
19 the Ninth Circuit held: "We have no trouble concluding that the City's cash-in-lieu ofbenefits payments
20 are not properly excluded from the regular rate of pay pursuant to § 207(e)(4)." Id. at 901-902.'
21 Defendant's entire motion is a clear attempt to confuse these different types of payments.
22 Defendant relies on the wrong test set forth in 29 C.F.R. § 778.215(a) for analyzing whether a health
23 benefit plan is bona fide. This discussion does not relate in any way to the issue of whether $20 a month
24 cash payments paid directly to employees in lieu ofbenefits are excludable. Rather, whether the Defendant
25 established a bona fide health plan involves the different issue of whether the irrevocable benefit
26 payments paid directly to the trustee f o r benefits are properly excluded from the regular rate.
27
28
' Emphasis added unless otherwise stated.
PLAINTIFF'S OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION
1 CASE No. 34-2017-00210560
1 The Ninth Circuit in Flores called the issue of whether to include benefits payments paid directly
2 to a tmstee or third party a much "closer quesfion" than the different issue raised by Plaintiff here as to
3 whether Defendant should have included cash-in-lieu payments made directly to Plaintiff in her overtime
4 rate of pay. Plaintiff is not asserting Defendant underpaid overtime wages by failing to include the payments
5 f o r benefits Defendant paid to the tmstee of the Health Net, Inc. Associates Benefit Program (the "Plan")
6 because Plaintiff does not have the required discovery and the issue is not raised by Defendant's motion.
7 As a result, the issue of whether the cash in lieu of benefits paid to employees was small compared to
8 Defendant's contributions for health coverage is not relevant. Because Defendant's motion only seeks
9 adjudication of whether the regular rate should have included cash benefits employees received directly in
10 lieu of health benefits, this Court should similarly "have no trouble concluding that the [Defendant's]
11 cash-in-lieu ofbenefits payments are not properly excluded from the regular rate of pay pursuant to
12 § 207(e)(4)." Flores, 824 F.3d at 901-902.
13 For these reasons as explained further below. Defendant is not entitled to summary adjudication as
14 to Plaintiffs claim that Defendant failed to properly calculate the regular rate of pay as to cash in lieu
15 benefits. These cash in lieu benefits were bonuses that should have increased the overtime wages paid to
16 Plaintiff Defendant's motion does not seek summary adjudication of the separate issue of whether benefits
17 payments made directly to the third party or tmstee were properly excluded from the regular rate.
18
19 II. STATEMENT OF FACTS
20 Defendant provided a Flexible Benefits Plan to employees under which Defendant fumished a
21 designated monetary amount for the piirchase of medical, vision, and dental benefits. (Colia Declaration,
22 8, filed with Defendant's Motion for Summary Adjudication ("Colia Decl.") Defendant's representations
23 to employees regarding the plan were articulated in Summary Plan Descriptions. (Colia Decl., *\ 5)
24 The Plan Descriptions admitted that the benefit plans were part of Defendant's effort "to provide
25 associates with a competitive benefits program that is part of our total remuneration plan." (2011-
26 2015 Summary Plan Description at pg. 1 and 2016 Summary Plan Description at pg. 1, attached respectively
27 as Exhibits 3 & 4 to the Declarafion of Aparajit Bhowmik ("Bhowmik Decl."))
28
PLAINTIFF'S OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION
2 CASE No. 34-2017-00210560
1 The Plans specified the compensafion is for hours worked by requiring that the employee is "a
2 regular associate scheduled to work at least 20 hours per week for the Company." (Exhibit 3 at pg.
3 HNCA000917; Exhibit4 at HNCA000758) The Plans further specified that participating employees may
4 not use the benefits to pay for "[e]xpenses incurred for days you are not working or days when you do not
5 meet eligibility requirements..." (2011-2015 Plan at Exhibit 3 to Bhowmik Decl. at pg. HNCA000970 and
6 2016 Plan at Exhibit 4 to Bhowmik Decl. at pg. HNCA000845 Y
7 Defendant "appointed a third-party administrator to administer" the flexible spending account.
8 (Exhibit 3 at HNCA000964 and Exhibit 4 at HNCA000833') DefendantHealthNetof Califomia, Inc. paid
9 the actual costs ofbenefits under the Plans for eligible employees by providing irrevocable payments to the
10 third party. Health Net, Inc. (Colia Decl., H 4).
11 I f employees elected to receive optional benefits, Defendant paid tax-free Flex Dollars as the
12 employer's share toward the optional benefit of medical and/or dental coverage. (Exhibit 4 at HNCA000921
13 and Exhibit 5 at HNCA000764) Those payments were only to be used for the optional benefit selected by
14 the employees. {Id.)
15 Employees who elected not to receive an optional benefit were provided with Flex Dollars
16 represented as cash in the employee's paycheck and all employees were ''taxed on this amount."
17 (M)(emphasis original). Plaintiff Spears waived medical coverage during her employment with Defendant
18 and, as a result, received the taxed cash payment of $20 coded in her paycheck as "MedFlxWave." This
19 payment was cash in lieu ofbenefits. (Declarafion of Diane C. Rodes filed with Defendant's Opposition
20 ("Rodes Decl."), H 8) These were nondiscretionary bonus payments. (Plainfiff s Sep St. Fact Nos. 1-6)
21 Plaintiff Spears, however, did not waive dental coverage. Accordingly, Defendant paid a tax-free
22 amount of Flex Dollars to HNI on behalf of Plaintiff Spears for dental coverage that was coded in her
23 paycheck as "DenFlxElct." This payment was not a cash in lieu of benefits because the payments was
24 specifically made to a third party on an irrevocable basis so that Plainfiff would be provided with dental
25 benefits under Defendant's plan. (Rodes Decl., 7-8)
26 Defendant failed to include the payments coded as "MedFlxWave" in the overtime payments made
27 to Plaintiff Spears. As shown on her wage statement attached as Exhibit 1 to the Bhowmik Decl., the
28 overtime paid was only 1.5 rimes her base hourly rate of $15,625 in the amount of $23.4375 per hour.
PLAINTIFF'S OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION
3 CASE No. 34-2017-00210560
1 IIL L E G A L STANDARD
2 "[BJecause ofthe unusual and drastic nature of the remedy and the importance of safeguarding the
3 adverse party's right to a trial, the summary judgment procedure 'should be used with caufion in order that
4 it may not become a substitute for exisfing methods in the determination of issues of fact.'" {Albermont
5 Petroleum, Ltd. v. Cunningham (1960) 186 Cal.App.3d 84,92) In determining whether summary judgment
6 is appropriate, the moving party's evidence must be strictly constmed, "in order to avoid unjustly depriving
7 the plainfiff of a trial." {Brantley v. P/5i3ro(1996)42Cal.App.4th 1591,1601) In contrast, declarations and
8 evidence offered in opposition to a summary judgment motion must be liberally constmed. {See D'Amico
9 V. Board of Medical Examiners (1974) 11 Cal.3d 1, 20-21) "As a result, our courts have applied the
10 procedure with care and any doubt as to the granting of a motion for summary judgment is resolved
11 against the moving party." {Albermont Petroleum, supra, 186 Cal.App.3d at p. 92)
12 "Califomia has a long-standing policy of discouraging employers from imposing overtime work."
13 Alvarado v. Dart Container Corp. of CaL (2018) 4 Cal. 5th 542, 552. "For nearly a century, this policy has
14 been implemented through regulations, called wage orders, issued by the Industrial Welfare Commission
15 (the TWC). These wage orders are issued pursuant to an express delegadon of legislative power, and they
16 have the force of law." Id., citing Martinez v. Combs (2010) 49 Cal.4th 35, 52-57.
17 "In 1998, the IWC modified several wage orders ... and by doing so it partially eliminated the
18 eight-hour-day mle, thus permitting employers to offer flexible hours within a 40-hour workweek without
19 having to pay an overtime premium." Alvarado, 4 Cal.5th 553. "The Legislature responded swiftly by
20 enacting the Eight-Hour-Day Restoration and Workplace Flexibility Act of 1999, and the IWC's wage orders
21 were then modified again, this fime to conform to the 1999 act." / [as of Mar. 5, 2018] (IWC Wage Order No. 4-2001).)
28 Such work must be compensated at 1.5 rimes the employee's "regular rate of pay," stepping up to double
PLAINTIFF'S OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION
4 CASE No. 34-2017-00210560
1 the "regular rate of pay" if the employee works in excess of 12 hours in a day or in excess of eight hours
2 on a seventh consecutive working day. {Id. at subd. 3(A)(1).) As noted. Labor Code secfion 510 imposes
3 similar requirements. Thus, for overtime work, an employee must receive a 50 percent premium on top of
4 his or her regular rate of pay, and in some cases, the employee must receive a 100 percent premium.
5 An employee's "regular rate of pay" for purposes of Labor Code section 510 and the IWC wage
6 orders is not the same as the employee's straight time rate (i.e., his or her normal hourly wage rate). Regular
7 rate of pay, which can change from pay period to pay period, includes adjustments to the straight fime rate,
8 reflecting, among other things, shift differenfials and the per-hour value of any nonhourly compensafion the
9 employee has eamed. {Alvarado, 4 Cal. 5th at 554).
10 As the Department of Labor Standards Enforcement (the "DLSE") stated in the DLSE Manual:
11 In not defining the term "regular rate of pay", the Industrial Welfare Commission has
manifested its intent to adopt the definifion of "regular rate o f pay" set out in the Fair Labor
12 Standards Act ("FLSA") 29 USC § 207(e): "...the 'regular rate' at which an employee is
employed shall be deemed to include all remuneration for employment paid to, or on behalf
13 of, the employee..." (29 USC § 207(e)).
14 (DLSE Manual, 49.1.2)
15 As recently articulated by the Califomia Supreme Court in Alvarado v. Dart, courts may consider
16 the DLSE's interpretation and the reasons proffered in support of such interpretation and adopt the DLSE's
17 interpretation as the court's own i f the court is persuaded that the DLSE's interpretation was correct.
18 {Alvarado, 4 Cal.5th at 561). In doing so, courts "may take into consideration the DLSE's expertise and
19 special competence, as well as the fact that the DLSE Manual is a formal compilation that evidences
20 considerable deliberafion at the highest policymaking level of the agency." Id.
21 Thus, even though this case involves Califomia law, federal authorities sfill provide useful guidance
22 in applying state law in deciding what compensation should be included in the regular rate. {Huntington
23 Mem'l Hosp. v. Superior Court (2005)131 Cal. App. 4th 893, 903). In the Fair Labor Standards Act (the
24 "FLSA") (29 U.S.C. § 201 et seq.), the "regular rate" is defined as "all remuneration for employment paid
25 to, or on behalf of, the employee ... ." (29 U.S.C. § 207(e).)
26
27
28
PLAINTIFF'S OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION
5 CASE No. 34-2017-00210560
1 IV. ARGUMENT
2 A. Cash In Lieu of Benefits Payments Paid to Employees Must Be Included in the Regular
Rate as a Matter of Law
3" The FLSA, like Califomia law, requires employers to pay an overtime compensation rate of one and
4 one-half times the "regular rate of pay." (29 U.S.C. § 207(a)). The regular rate includes "all remunerafion
5 for employment paid to, or on behalf of the employee" (29 U.S.C. § 207(e)), subject to certain exclusions
6 enumerated by statute.
7 Defendant relies on the wrong exclusion in arguing that cash payments Defendant made to Plaintiff
in lieu of medical benefits should not be included in the regular rate. The exclusion erroneously relied upon
9
by Defendant is found in the following definition of "Payments That Are To Be Excluded in Determining
10
'Regular Rate'" offered by the DLSE Manual:
11
contributions irrevocably made by an employer to a trustee or third person pursuant to
12 a bona fide plan for providing old-age, retirement, life, accident, or health insurance or
similar benefits for employees.
13
(DLSE Manual, § 49.1.2.4 (4), citing 29 U.S. Code § 201(e)(4)).
14
This particular exclusion was recently examined in Flores, where The City of San Gabriel (the City)
15
was an employer that maintained a flexible benefits plan under which a designated monetary amount was
16
credited to each employee for the purchase of medical, vision, and dental benefits. {Flores, supra, 824 F.3d
17
890 at 896). All employees were required to use a portion of these funds to purchase vision and dental
18
benefits. {Id). However, if an employee had alternate medical coverage, he or she could opt out of using
19
the remainder of these funds to purchase medical insurance and, instead, receive the unused portion of their
20
benefits allotment as a cash payment. {Id). The City designated such payments as "benefits" and excluded
21
them when calculating employees' regular rate of pay for purposes ofovertime. {Id). The trial court mled
22
on cross-morions for partial summary judgment and held that the City's cash-in-lieu payments were not
23
properly excluded from the regular rate of pay, but that the payments f o r benefits made to the tmstees or
24
third parties were properly excluded. {Id. at 897). The trial court also found that the violation of failing to
25
include the cash-in-lieu payments was not willful.
26
On appeal, the City argued that the cash-in-lieu ofbenefits payments qualified for exclusion under
27
Section 207(e)(4) as "contributions irrevocably made by an employer to a trustee or third person
28
PLAINTIFF'S OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION
6 CASE No. 34-2017-00210560
1 pursuant to a bona fide" employee benefits plan." {Id. at 901). Although the payments were made directly
2 to employees, not to a tmstee or third person, the City claimed they "generally" satisfied the requirements
3 because they funded employee benefits, and the City "should not be penalized for administering its own
4 flexible benefits plan. {Id). The Ninth Circuit rejected this argument because the cash-in-lieu payments were
5 made to employees, finding that the plain text of Section 207(e)(4) applies only to payments made to a
6 "tmstee or third person."
7 The City's cash-in-lieu of benefits payments are not made to a trustee or third party,
and therefore those payments do not meet the requirements of § 207(e)(4). We are not
at liberty to add exceptions to the clear requirements set forth in the statute for payments that
"generally" safisfy the requirements of that provision. This is particularly tme here, where
9 exemptions to the FLSA's requirements are to be narrowly constmed in favor of the
employee. Cleveland, 420 F.3d at 988 {citing Arnold, 361 U.S. at 392). We thus have no
10 trouble concluding that the City's cash-in-lieu ofbenefits payments are not properly
excluded from the regular rate of pay pursuant to § 207(e)(4).
11 {Flores, supra, 824 F.3d at 901-02).
12 In addition to holding that the City's cash-in-lieu ofbenefits payments must be included in the
13 regular rate, the Ninth Circuit reversed the district court's conclusion that the City had acted in good faith
14 in excluding the payments, and, instead, concluded that the City's overtime violations were willful. The
15 court based its willfulness finding on the fact that the City had not shown that the human resources
16 personnel who made the determinafion took any affirmative steps to ensure that the payments qualified for
17 exclusion. {Id. at 906-907).
18 B. Irrevocable Payments to Trustees or Third Parties May Be Excluded from the Regular
19 Rate If the Plan Meets the Test Set Forth in 20 C.F.R. S 778.215(a)
20 In easily concluding that the cash-in-lieu payments do not qualify for the exception provided by §
21 207(e)(4) of the FLSA, the Ninth Circuit did not analyze the percentage of cash-in-lieu payments of total
22 plan contributions. That discussion was pertinent to the different issue of whether the irrevocable benefits
23 payments made to the tmstee or third party pursuant to the plan for health benefits only were also properly
24 excluded. This different issue described as "a closer question" was decided in favor of the employer at the
25 trial court level, unlike the cash-in-lieu issue that the trial court held should have been included.
26 The Ninth Circuit ultimately reversed the trial court's mling on the closer question and held that
27 "even the City's payments to trustees or third parties under its Flexible Benefits Plan are not properly
28 excluded under § 207(e)(4)." {Id. at 903). In reaching this conclusion, the Ninth Circuit discussed at length
PLAINTIFF'S OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION
7 CASE No. 34-2017-00210560
1 whether the cash-in-lieu payments were incidental to the benefits payments by assessing whether those
2 payments reached up to 20% of the employer's total contribufion amount. This factual discussion,
3 however, had nothing to do with the issue of whether cash-in-lieu payments must be included in the
4 regular rate. The Ninth Circuit had already found mled in the affirmative on this different question.
5 C. Cash-In-Lieu Payments to Plaintiff Should Not Have Been Excluded from the Regular
Rate bv Defendant
6
Plaintiffs complaint alleges that Defendant failed to calculate the regular rate of employees by
7
failing to include "non-discretionary bonuses and/or other applicable remuneration when calculating regular
8
rates of pay for class members." (Consolidated Complaint, 14(E); see also id. at ^ 41) Plaintiff opposes
9
Defendant's claim that Defendant properly excluded the cash-in-lieu payments made to Plaintiff in the taxed
10
amount of $20 per month. Under Flores, these payments are the kind of "applicable remuneration"
11
referenced in the Consolidated Complaint that must be included in the regular rate.
12
1. The "MedFlxWave" Payments Are Cash in Lieu Benefits the Ninth Circuit Had
13 "No Trouble" Concluding Were Not Properly Excluded from the Regular Rate
of Pay Pursuant to S 207re)(4)
14 Defendant admits Plainfiff was one of many participants in a medical and dental plan where a
15 participant was required to contribute some amount toward the cost ofbenefits, unless the participant had
16 other medical coverage. In that event, the participant was paid cash in lieu of the benefits by Defendant that
17 appeared on the employee's paystub as "MedFlxWave" if waived. {See Paystubs, Exhibit 1 to Bhowmik
18 Declaration) These payments should not have been excluded from the regular rate under Flores.
19 2. Whether "DenFlxElect" Payments Should Be Included in the Regular Rate
20 Raises a Different Issue Requiring Analysis of Whether the Plan is Bona Fide
21 In contrast to the waived medical benefits, Plainfiff elected to receive Dental benefits. These
22 payments appear on Plainfiff s paystub as "DenFlxElct." {See, e.g., Plainfiff s Wage Statements at page
23 HNCA000078, attached as Exhibit 1 to Bhowmik Decl.) Defendant did not move for summary adjudication
24 on the issue of whether Defendant properly excluded these payments that were required to be made directly
25 to the tmstee or third party for dental benefits. If that was the issue, then a discussion regarding the factors
26 set forth in code of regulation 29 C.F.R. § 778.215(a) would be warranted. Such a discussion would include
27 the factual comparison relied upon by Defendant of the total cash payments made to employees compared
28 to the payments made direcfiy to the third party.
PLAINTIFF'S OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION
8 CASE No. 34-2017-00210560
1 However, as shown by the analysis used by the Ninth Circuit in Flores, the much easier question
2 of whether the cash-in-lieu payments should be included does not require an inquiry into whether Defendant
3 set up a bona fide benefits plan. As a result, the outcome of this case should mirror the mling in Flores at
4 the trial court level where the court found, "cash-in-lieu ofbenefits payments were not properly excluded
5 from its calculation of the regular rate of pay, except to the extent that the City makes payments to
6 trustees or third parties." {Flores, 824 F.3d at 896-97).
7 3. Defendant's Motion Erroneously Attempts to Apply the Test for Exclusion of
Irrevocable Benefits Payments to Cash In Lieu of Benefits
Defendant erroneously attempts to conflate the different issues, but the Flores decision should
9
highlight how the issue of whether the cash-in-lieu payments are excludable is easily answered in favor of
10
Plaintiff. Flores was followed by the Court in Alder v. City of Yolo where the issue of whether to include
11
cash-in-lieu payments was described as "not especially complex; indeed, liability as to the plaintiffs who
12
were paid cash in lieu of health benefits was clearly established by the Ninth Circuit's decision in
13
Flores v. City of San Gabriel, 824 F.3d 890, 901, 907 (9th Cir. 2016)." {Alder v. Cty. of Yolo, 2018 U.S.
14
Dist. LEXIS 9987, at *4 (E.D. Cal. Jan. 22, 2018)).
15 ..
4. Whether the Plan is Bona Fide Is Irrelevant to Whether Cash In Lieu Payments
16 Can Be Excluded from the Regular Rate
17 There are no exceptions to the mle that cash in lieu benefits must be included in the regular rate.
18 The holding of Flores unequivocally states as a matter of law that cash payments in lieu of health
19 benefits "must be included in the regular rate of pay and thus in the calculation of the overtime rate."
20 {Flares, supra, 824 F.3d at 895). Defendant's attempt to conflate this simple issue with the "closer
21 question" of whether to include payments made directly to a trustee is a transparent attempt to
22 confuse the issues.
23 Defendant argues at length that "the Plan qualifies as a 'bona fide' benefits plan" without ever
24 explaining how this issue is relevant to whether Defendant "properly excluded cash benefits received by
25 Plaintiff Spears in her regular rate." (Def Opp., pg. 10) There is nothing in Defendant's motion or the law
26 that stands for the proposition that cash payments made direcfiy to employees in lieu of receiving benefits
27 can be excluded from the regular rate. The "bona fide benefits plan" issue is related to the issue not raised
28 in Defendant's motion which is whether the tax free benefits can be excluded from the regular rate.
PLAINTIFF'S OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION
9 CASE No. 34-2017-00210560
1 Under 20 C.F.R. § 778.215(a), Defendant's plan may be bona fide "it provides, as an incidental part
2 thereof, for the payment to an employee in cash of all or a part of the amount standing to his credit..."
3 However, the fact that the plan is bona fide does not mean that the taxed cash-in-lieu payments paid
4 to Plaintiff are allowed to be excluded from the regular rate. Such an erroneous conclusion is clearly
5 contradicted by the holding in Flores and can find no support in section 207(e)(4) of the FLSA, which only
6 allows for the exclusion of "contributions irrevocably made by an employer to a tmstee or a third person."
7 Defendant's argument is also not supported by the five conditions set forth for determining whether a plan
8 is bona fide under 29 C.F.R. § 778.215(a). This entire discussion is irrelevant to the issue of whether
9 Defendant should have included cash in lieu payments in Plainfiff s overtime payments.
10 The cash in lieu payments Defendant excluded from Plaintiffs regular rate are identical to the kind
11 of payments the trial court in Flores and the Ninth Circuit both held must be included because such
12 payments are paid directly to the employee, as opposed to a trustee or a third party. As admitted by
13 Defendant's declarant, Diane C. Rodes, when Plaintiff waived medical and/or dental coverage. Defendant
14 provided a cash benefit to Plaintiff that was reflected as a monetary line item in the 'Eamings' section of
15 the Participant's wage statement. (Rodes Declaration, *^ 7-8) Ms. Rodes even describes such payments
16 as "cash benefits in lieu of coverage" under the plan. {Id). The parties do not dispute these cash payments
17 were paid directly to employees who opted out of coverage and that Plaintiff could use this money to make
18 whatever purchases she wanted.
19 The cash in lieu payments stand in stark contrast to the benefits payments made by Defendant
20 directly to the tmstee or third party for employees who wished to receive medical or dental benefits. As
21 described by Defendant's declarant, Debbie Cola, the payments made for employees who did not waive their
22 coverage "were tracked, kept in a separate account, and used only for proper Plan purposes related to the
23 health and welfare benefits of HNCA employees..." (Colia Decl., ^ 3). These are different kinds of
24 payments that may be excluded under Section 207(e)(4) of the FLSA under certain circumstances. Unlike
25 the cash in lieu contributions that Plaintiff contends should have been included in the regular rate,
26 the benefits payments "were irrevocable...[and] HNCA was unable to recapture or divert the funds
27 for HNCA's use or benefit." (Colia Decl., ^ 4). For employees who, unlike Plainfiff, did not waive
28 medical coverage, these employees were "required to contribute some amount toward the cost of the
PLAINTIFF'S OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION
10 CASE No. 34-2017-00210560
1 benefit(s) he or she selected" in the form of Flex Dollars. (Caolia Decl., ^ 9) The cash in lieu benefits, on
2 the other hand, was money Plaintiff was free to spend on anything except for medical benefits because she
3 had opted out of receiving any coverage under the Plan.
4 A claim that the irrevocable payments made to the tmstee should have been included in an
5 employee's regular rate would require proof that the enfire plan was not bona fide, but Defendant's motion
6 does not seek summary adjudication of that issue. The propriety of excluding cash-in-lieu payments is
7 the issue Defendant sought to adjudicate and the law is clear that these payments must be included
8 in the regular rate because these payments do not fall within the exclusion of Section 207(e)(4) ofthe
9 FLSA. This conclusion is consistent with the discussion in the Flores case and the relevant text is
10 highlighted in the pages 901 to the beginning of page 902 of the opinion and attached to the Bhowmik Decl.
11 as Exhibit 2 for the convenience of the Court. The discussion from Flores that Defendant is erroneously
12 conflating with the cash in lieu discussion regarding whether irrevocable payments to third parties are
13 properly excluded are in pages 902 to 903 of Flores opinion Plaintiff attaches as Exhibit 2 to the Bhowmik
14 Declaration for the Court's convenience. Plaintiff hopes this presentation ofthe case in this way will assist
15 the Court in understanding the difference between the issues.^
16 Because the cash in lieu ofbenefits payments were paid to Plaintiff for waiving benefits, as opposed
17 to payments to a third party or tmstee for the purpose of obtaining benefits, the law could not be more clear
18 that these cash in lieu payments are bonuses that cannot be excluded from the regular rate.
19 The City urges us to find that its cash-in-lieu ofbenefits payments fall within the ambit of
§ 207(e)(4) even though the payments are not made to a tmstee or third party because the
20 payments "generally" meet the requirements of that subsection, arguing that it should not be
penalized for administering its own flexible benefits plan. But[w]here '[a] statute's language
21 is plain, the sole funcfion of the courts is to enforce it according to its terms,' because 'courts
must presume that a legislature says in a statute what it means and means in a statute what
22 it says there.'" [citations] The City's cash-in-lieu ofbenefits payments are not made to
a trustee or third party, and therefore those payments do not meet the requirements
23 of § 207(e)(4).
24 (F/ora, 824F.3d901)
25
26 ^ Defendant does not rely on Section 207(e)(2) of the FLSA to claim that the cash-in-lieu
payments are excluded under this provision that allows exclusion for payments that are not made as
2^ compensation for his hours of employment. As a result. Defendant cannot raise such an issue for the
2g first time in the reply. The Ninth Circuit, however, did answer this quesfion and held that cash-in-lieu
payments are not properly excluded from the regular rate under this provision ofthe FLSA.
PLAINTIFF'S OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION
11 CASE No. 34-2017-00210560
1 D. Defendant's Motion for Summary Adjudication Should Be Denied Based on the Failure
to Provide Relevant Discovery
2
Plaintiff respectfully requests a denial on the hearing on the summary adjudication motion pursuant
3
to Code Civ. Proc, § 437c, subd. (h) with respect to any claim by Defendant that payments made directly
4
to a tmstee or third party for medical benefits were properly excluded from the regular rate. This issue not
5
raised in Defendant's motion was described by the Ninth Circuit as the "closer question" hinging on whether
6
the entire benefits plan was bona fide and the five (5) factor test set forth in 29 C.F.R. ^ 778.215(a). A
7
reason denial is requested on this claim is because Defendant submitted facts related to this inapposite test
8
as the foundation for Defendant's mofion.
9
For Plaintiff Spears, the benefits payments paid by Defendant direcfiy to the trustee or third party
10
were coded as "DenFlxElct." Plainfiff requested the payroll records for the Class Members in requests for
11
producfion numbers 20-21 and filed a mofion to compel the production of these records. A review of these
12
payroll records is needed by Plaintiff in order to be able to ascertain whether certain facts Defendant claims
13
are undisputed material facts can be disputed, including:
14 ..
Fact No. 14: Theexactamount of'Flex Dollars' to which a Participant was entitled to varied
15 depending on the medical and dental plans that he or she chose, the number of dependents
covered and the Participant's geographic location, but generally, the amount was less than
16 the total cost of the benefit(s) that a participant elected.
17 Fact No. 15: In a vast majority of cases, the Participant was required to contribute some
amount toward the cost of the benefit(s) he or she selected, and the portion of the benefit
[8 coverage was deducted from his or her paycheck.
19 Fact No. 19: In each ofthe Plan years 2013, 2014, 2015 and 2016, the total cash benefits
provided to Participants who waived dental and/or medical coverage represented a very
20 small percentage of HNCA's contributions provided under the Plan for the elected dental
and/or medical coverage: 1/4% in 2013, 1.3% in 2014; 0.9% in 2015; and 0.9% in 2016.
21 (Defendant's Separate Statement in Support of Motion for Summary Adjudication).
22 The discovery at issue in Plainfiff s mofion to compel the payroll records of the Class Members
23 would lead to the production of controverting evidence on the issues of whether the overall amount of Flex
24 Dollars was or was not less than the cost of the benefits that the participants elected with regard to Fact No.
25 14. This discovery would be pertinent to the issue of whether Defendant properly excluded from the
26 overtime payments the benefits payments made directly to the tmstee coded on Plaintiffs wage statement
27 as "DenFlxElct."
28
PLAINTIFF'S OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION
12 CASE No. 34-2017-00210560
1 The payroll data would also allow Plaintiff to ascertain whether in the "vast majority of cases"
2 participants had portions ofbenefits coverage deducted from his or her paycheck with regard to Fact No.
3 15. Defendant should not be permitted to object on the one hand that tuming over such discovery is
4 burdensome, while on the other hand Defendant is secrefiy reviewing and processing the same classwide
5 discovery for Defendant's own benefit.
6 The same goes for Defendant's representations in Fact No. 19 regarding the total amount of cash
7 benefits provided to all Plan Participants on a classwide basis. Plaintiff would have been able to review and
8 corroborate whether Defendant's factual claims were tme, had Defendant complied with Plainfiff s
9 discovery request for the payroll data of the Class Members. Instead, Defendant's opposition to discovery
10 leaves Plaintiff in the unfair posifion where Plaintiff has no ability to respond to this fact in the separate
11 statement. This discovery would be pertinent to the issue of whether Defendant properly excluded from the
12 overtime payments the benefits payments made directly to the tmstee coded on Plaintiffs wage statement
13 as "DenFlxElct." If Plaintiff s review of the data shows that Defendant's calculations were incorrect and
14 the cash payments were not small in comparison to Defendant's contribufions, then Plaintiff would be able
15 to argue that Defendant's plan was not bona fide such that the payments Defendant made for benefits
16 directly to the tmstee or third party should have been included in the overtime rate of pay.
17
18 V. CONCLUSION
19 For all the reasons as set forth above, Defendant's Motion for summary adjudication must be denied
20 based on Defendant's argument that cash-in-lieu benefits coded as "MedFlxWave" were properly
21 excluded from Plaintiffs regular rate.
22 Importantly, Defendant's request for summary adjudicafion does not ask for a mling on whether
23 Defendant properly excluded payments irrevocably made to a third party for employees who elected
24 coverage as coded in Plaintiff Spears' paystub as "DenFlxElct." In order to engage with the five (5) factor
25 test set forth in 29 C.F.R. Tl 778.215(a) relevant to this separate issue, Plainfiff would need Defendant to
26 comply with Plaintiffs request for the payroll data of the Class Members showing the amounts of payments
27 made for benefits compared to those made in lieu ofbenefits. The Court should, therefore, deny Defendant's
28 Mofion.
PLAINTIFF'S OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION
13 CASE No. 34-2017-00210560
1 Respectfully submitted,
2 DATED: April 10, 2018 BLUMENTHAL NORDREHAUG BHOWMIK DE BLOUW LLP
3
By:_
4 A.J. Bhowmik
Attomeys for Plaintiff
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PLAINTIFF'S OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION
14 CASE No. 34-2017-00210560
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FILED ENDORSED BLUMENTHAL NORDREHAUG BHOWMIK DEffidbuWLL^F' ' ^9 Norman B. Blumenthal (State Bar #068687) SUPERIOR COURT OF CALlFORHiA Kyle R. Nordrehaug (State Bar #205975) CCUNi Y Or SACiiAl'Lni Q Aparajit Bhowmik (State Bar #248066) Victoria B. Rivapalacio (State Bar #275115) 2255 Calle Clara La Jolla, CA 92037 Telephone: (858)551-1223 Facsimile: (858) 551-1232 6 Attomeys for Plaintiff 7 9 10 SUPERIOR COURT OF THE STATE OF CALIFORNIA 11 IN AND FOR THE COUNTY OF SACRAMENTO 12 13 ANDREA SPEARS, an individual, on behalf CaseNo. 34-2017-00210560-CU-OE-GDS of herself and on behalf of all persons 14 similarly situated. CLASS ACTION 15 Plaintiff PLAINTIFF ANDREA SPEARS' OPPOSITION 16 TO DEFENDANT'S MOTION FOR SUMMARY vs. JUDGMENT 17 18 HEALTH NET OF CALIFORNIA, INC., a Telephone Appearance Califomia Corporation; and Does 1 through 19 50, Inclusive, Reservation No. 2313007 20 Defendants. Hearing Date: April 26, 2018 Hearing Time: 9:00 a.m. 21 Judge: Hon. Steven H. Rodda TOMAS R. ARANA, on behalf of himself, Dept.: 54 22 all others similarly situated. Action Filed: April 5,2017 23 Plaintiff, 24 vs. 25 HEALTH NET OF CALIFORNIA, INC., a Califomia corporation; and DOES 1 through 26 50, inclusive. 27 Defendants. 28 PLAINTIFF'S OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION CASE No. 34-2017-00210560 1 T A B L E OF CONTENTS 2 3 I. INTRODUCTION 1 4 II. STATEMENT OF FACTS 2 5 III. LEGAL STANDARD 4 6 IV. ARGUMENT 6 7 A. Cash In Lieu of Benefits Payments Paid to Employees Must Be Included in the Regular Rate as a Matter of Law 4 0 o B. Irrevocable Payments to Tmstees or Third Parties May Be Excluded from the Regular 9 Rate If the Plan Meets the Test Set Forth in 20 C.F.R. § 778.215(a) 7 10 C. Cash-In-Lieu Payments to Plaintiff Should Not Have Been Excluded from the Regular Rate by Defendant 8 11 1. The "MedFlxWave" Payments Are Cash in Lieu Benefits the Ninth Circuit Had 12 "No Trouble" Concluding Were Not Properly Excluded from the Regular Rate of Pay Pursuant to § 207(e)(4) 8 13 2. Whether "DenFlxElect" Payments Should Be Included in the Regular Rate Raises 14 a Different Issue Requiring Analysis of Whether the Plan is Bona Fide 8 15 3. Defendant's Motion Erroneously Attempts to Apply the Test for Exclusion of Irrevocable Benefits Payments to Cash In Lieu of Benefits 9 16 4. Whether the Plan is Bona Fide Is Irrelevant to Whether Cash In Lieu Payments 17 Can Be Excluded from the Regular Rate 9 18 D. Defendant's Motion for Summary Adjudication Should Be Denied Based on the Failure to Provide Relevant Discovery 12 19 V. CONCLUSION 13 20 21 22 23 24 25 26 27 28 PLAINTIFF'S OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION CASE No. 34-2017-00210560 1 TABLE OF AUTHORITIES 2 3 Cases: 4 Albermont Petroleum, Ltd. v. Cunningham, 186Cal.App.3d84(1960) 2 5 Alder Cty. of Yolo, 6 2018 U.S. Dist. LEXIS 9987 (E.D. Cal. Jan. 22, 2018) 7 7 Alvarado v. Dart Container Corp. of Cal., 4 Cal. 5th 542 (2018) 4-5 Brantley v. Pisaro 9 42 Cal.App.4th 1591 (1996) 2 10 Brinker Restaurant Corp. v. Superior Court, 53 Cal.4th 1004 (2012) 4 11 D Arnica v. Board of Medical Examiners, 12 11 Cal.3d 1 (1974) 4 13 Flores v. City of San Gabriel, 824 F.3d 890 (9th Cir. 2016) 1,2,6-11 14 Huntington Mem'l Hosp^ v. Superior Court, 15 131 Cal. App. 4th 893 (2005) 5 16 Huyck V. Limitless, Ltd^ Liab. Co., No. 3:15-CV-01298-BR, 17 2016U.S. Dist. LEXIS 131311 (D. Or. Sep. 26, 2016)) 1 18 Martinez v. Combs, 49Cal.4th 35 (2010) 4 19 20 Other Authority, Statutes, Rules, and Regulations: 21 29 C.F.R. § 778.215 1, 7, 8, 10, 12-13 22 23 24 25 26 27 28 PLAINTIFF'S OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION CASE No. 34-2017-00210560 1 I. INTRODUCTION 2 Plaintiff Andrea Spears ("Plaintiff) opposes the motion for summary adjudication (the "Motion") 3 filed by Defendant Health Net of Califomia, Inc. ("Defendant") of Plaintiff s claim that Defendant failed 4 to include cash in lieu of benefit payments in the overtime wage payments paid to Plaintiff The Ninth 5 Circuit in Flores v. City of San Gabriel recently held that these cash-in-lieu ofbenefits payments cannot be 6 excluded under § 207(e)(4) ofthe Fair Labor Standards Act (the "FLSA"). The law is so clear on this point 7 that the Ninth Circuit held that the employer who failed to include cash-in-lieu payments in the regular rate 8 lacked good faith by failing to make the proper calculation. Flores v. City of San Gabriel, 824 F.3d 890, 9 90)5 {9\![\Cv[.l^\€); see also Huyckv. Limitless. Ltd^ Liab. Co., 2016 U.S. Dist. LEXIS 131311, at * 19 (D. 10 Or. Sep. 26, 2016)(failing to include cash-in-lieu payments in regular rate lacked good faith). Defendant's 11 motion is based on conflating cash in lieu ofbenefits with payments made irrevocably to a third party for 12 benefits. 13 Cash in lieu ofbenefits paid by an employer directly to an employee are a completely different kind 14 of compensation from benefits payments paid by an employer directly to a trustee or third party. Defendant 15 relies on 29 U.S.C. § 207(e)(4), which provides that the regular rate shall not include "contributions 16 irrevocably made by an employer to a trustee or third person pursuant to a bona fide plan for 17 providing...health insurance." The cash payments at issue here, however, are payments of $20 per pay 18 period paid directly to Plaintiff in lieu of health insurance. Identical payments were at issue in Flores, where 19 the Ninth Circuit held: "We have no trouble concluding that the City's cash-in-lieu ofbenefits payments 20 are not properly excluded from the regular rate of pay pursuant to § 207(e)(4)." Id. at 901-902.' 21 Defendant's entire motion is a clear attempt to confuse these different types of payments. 22 Defendant relies on the wrong test set forth in 29 C.F.R. § 778.215(a) for analyzing whether a health 23 benefit plan is bona fide. This discussion does not relate in any way to the issue of whether $20 a month 24 cash payments paid directly to employees in lieu ofbenefits are excludable. Rather, whether the Defendant 25 established a bona fide health plan involves the different issue of whether the irrevocable benefit 26 payments paid directly to the trustee f o r benefits are properly excluded from the regular rate. 27 28 ' Emphasis added unless otherwise stated. PLAINTIFF'S OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION 1 CASE No. 34-2017-00210560 1 The Ninth Circuit in Flores called the issue of whether to include benefits payments paid directly 2 to a tmstee or third party a much "closer quesfion" than the different issue raised by Plaintiff here as to 3 whether Defendant should have included cash-in-lieu payments made directly to Plaintiff in her overtime 4 rate of pay. Plaintiff is not asserting Defendant underpaid overtime wages by failing to include the payments 5 f o r benefits Defendant paid to the tmstee of the Health Net, Inc. Associates Benefit Program (the "Plan") 6 because Plaintiff does not have the required discovery and the issue is not raised by Defendant's motion. 7 As a result, the issue of whether the cash in lieu of benefits paid to employees was small compared to 8 Defendant's contributions for health coverage is not relevant. Because Defendant's motion only seeks 9 adjudication of whether the regular rate should have included cash benefits employees received directly in 10 lieu of health benefits, this Court should similarly "have no trouble concluding that the [Defendant's] 11 cash-in-lieu ofbenefits payments are not properly excluded from the regular rate of pay pursuant to 12 § 207(e)(4)." Flores, 824 F.3d at 901-902. 13 For these reasons as explained further below. Defendant is not entitled to summary adjudication as 14 to Plaintiffs claim that Defendant failed to properly calculate the regular rate of pay as to cash in lieu 15 benefits. These cash in lieu benefits were bonuses that should have increased the overtime wages paid to 16 Plaintiff Defendant's motion does not seek summary adjudication of the separate issue of whether benefits 17 payments made directly to the third party or tmstee were properly excluded from the regular rate. 18 19 II. STATEMENT OF FACTS 20 Defendant provided a Flexible Benefits Plan to employees under which Defendant fumished a 21 designated monetary amount for the piirchase of medical, vision, and dental benefits. (Colia Declaration, 22 8, filed with Defendant's Motion for Summary Adjudication ("Colia Decl.") Defendant's representations 23 to employees regarding the plan were articulated in Summary Plan Descriptions. (Colia Decl., *\ 5) 24 The Plan Descriptions admitted that the benefit plans were part of Defendant's effort "to provide 25 associates with a competitive benefits program that is part of our total remuneration plan." (2011- 26 2015 Summary Plan Description at pg. 1 and 2016 Summary Plan Description at pg. 1, attached respectively 27 as Exhibits 3 & 4 to the Declarafion of Aparajit Bhowmik ("Bhowmik Decl.")) 28 PLAINTIFF'S OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION 2 CASE No. 34-2017-00210560 1 The Plans specified the compensafion is for hours worked by requiring that the employee is "a 2 regular associate scheduled to work at least 20 hours per week for the Company." (Exhibit 3 at pg. 3 HNCA000917; Exhibit4 at HNCA000758) The Plans further specified that participating employees may 4 not use the benefits to pay for "[e]xpenses incurred for days you are not working or days when you do not 5 meet eligibility requirements..." (2011-2015 Plan at Exhibit 3 to Bhowmik Decl. at pg. HNCA000970 and 6 2016 Plan at Exhibit 4 to Bhowmik Decl. at pg. HNCA000845 Y 7 Defendant "appointed a third-party administrator to administer" the flexible spending account. 8 (Exhibit 3 at HNCA000964 and Exhibit 4 at HNCA000833') DefendantHealthNetof Califomia, Inc. paid 9 the actual costs ofbenefits under the Plans for eligible employees by providing irrevocable payments to the 10 third party. Health Net, Inc. (Colia Decl., H 4). 11 I f employees elected to receive optional benefits, Defendant paid tax-free Flex Dollars as the 12 employer's share toward the optional benefit of medical and/or dental coverage. (Exhibit 4 at HNCA000921 13 and Exhibit 5 at HNCA000764) Those payments were only to be used for the optional benefit selected by 14 the employees. {Id.) 15 Employees who elected not to receive an optional benefit were provided with Flex Dollars 16 represented as cash in the employee's paycheck and all employees were ''taxed on this amount." 17 (M)(emphasis original). Plaintiff Spears waived medical coverage during her employment with Defendant 18 and, as a result, received the taxed cash payment of $20 coded in her paycheck as "MedFlxWave." This 19 payment was cash in lieu ofbenefits. (Declarafion of Diane C. Rodes filed with Defendant's Opposition 20 ("Rodes Decl."), H 8) These were nondiscretionary bonus payments. (Plainfiff s Sep St. Fact Nos. 1-6) 21 Plaintiff Spears, however, did not waive dental coverage. Accordingly, Defendant paid a tax-free 22 amount of Flex Dollars to HNI on behalf of Plaintiff Spears for dental coverage that was coded in her 23 paycheck as "DenFlxElct." This payment was not a cash in lieu of benefits because the payments was 24 specifically made to a third party on an irrevocable basis so that Plainfiff would be provided with dental 25 benefits under Defendant's plan. (Rodes Decl., 7-8) 26 Defendant failed to include the payments coded as "MedFlxWave" in the overtime payments made 27 to Plaintiff Spears. As shown on her wage statement attached as Exhibit 1 to the Bhowmik Decl., the 28 overtime paid was only 1.5 rimes her base hourly rate of $15,625 in the amount of $23.4375 per hour. PLAINTIFF'S OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION 3 CASE No. 34-2017-00210560 1 IIL L E G A L STANDARD 2 "[BJecause ofthe unusual and drastic nature of the remedy and the importance of safeguarding the 3 adverse party's right to a trial, the summary judgment procedure 'should be used with caufion in order that 4 it may not become a substitute for exisfing methods in the determination of issues of fact.'" {Albermont 5 Petroleum, Ltd. v. Cunningham (1960) 186 Cal.App.3d 84,92) In determining whether summary judgment 6 is appropriate, the moving party's evidence must be strictly constmed, "in order to avoid unjustly depriving 7 the plainfiff of a trial." {Brantley v. P/5i3ro(1996)42Cal.App.4th 1591,1601) In contrast, declarations and 8 evidence offered in opposition to a summary judgment motion must be liberally constmed. {See D'Amico 9 V. Board of Medical Examiners (1974) 11 Cal.3d 1, 20-21) "As a result, our courts have applied the 10 procedure with care and any doubt as to the granting of a motion for summary judgment is resolved 11 against the moving party." {Albermont Petroleum, supra, 186 Cal.App.3d at p. 92) 12 "Califomia has a long-standing policy of discouraging employers from imposing overtime work." 13 Alvarado v. Dart Container Corp. of CaL (2018) 4 Cal. 5th 542, 552. "For nearly a century, this policy has 14 been implemented through regulations, called wage orders, issued by the Industrial Welfare Commission 15 (the TWC). These wage orders are issued pursuant to an express delegadon of legislative power, and they 16 have the force of law." Id., citing Martinez v. Combs (2010) 49 Cal.4th 35, 52-57. 17 "In 1998, the IWC modified several wage orders ... and by doing so it partially eliminated the 18 eight-hour-day mle, thus permitting employers to offer flexible hours within a 40-hour workweek without 19 having to pay an overtime premium." Alvarado, 4 Cal.5th 553. "The Legislature responded swiftly by 20 enacting the Eight-Hour-Day Restoration and Workplace Flexibility Act of 1999, and the IWC's wage orders 21 were then modified again, this fime to conform to the 1999 act." / [as of Mar. 5, 2018] (IWC Wage Order No. 4-2001).) 28 Such work must be compensated at 1.5 rimes the employee's "regular rate of pay," stepping up to double PLAINTIFF'S OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION 4 CASE No. 34-2017-00210560 1 the "regular rate of pay" if the employee works in excess of 12 hours in a day or in excess of eight hours 2 on a seventh consecutive working day. {Id. at subd. 3(A)(1).) As noted. Labor Code secfion 510 imposes 3 similar requirements. Thus, for overtime work, an employee must receive a 50 percent premium on top of 4 his or her regular rate of pay, and in some cases, the employee must receive a 100 percent premium. 5 An employee's "regular rate of pay" for purposes of Labor Code section 510 and the IWC wage 6 orders is not the same as the employee's straight time rate (i.e., his or her normal hourly wage rate). Regular 7 rate of pay, which can change from pay period to pay period, includes adjustments to the straight fime rate, 8 reflecting, among other things, shift differenfials and the per-hour value of any nonhourly compensafion the 9 employee has eamed. {Alvarado, 4 Cal. 5th at 554). 10 As the Department of Labor Standards Enforcement (the "DLSE") stated in the DLSE Manual: 11 In not defining the term "regular rate of pay", the Industrial Welfare Commission has manifested its intent to adopt the definifion of "regular rate o f pay" set out in the Fair Labor 12 Standards Act ("FLSA") 29 USC § 207(e): "...the 'regular rate' at which an employee is employed shall be deemed to include all remuneration for employment paid to, or on behalf 13 of, the employee..." (29 USC § 207(e)). 14 (DLSE Manual, 49.1.2) 15 As recently articulated by the Califomia Supreme Court in Alvarado v. Dart, courts may consider 16 the DLSE's interpretation and the reasons proffered in support of such interpretation and adopt the DLSE's 17 interpretation as the court's own i f the court is persuaded that the DLSE's interpretation was correct. 18 {Alvarado, 4 Cal.5th at 561). In doing so, courts "may take into consideration the DLSE's expertise and 19 special competence, as well as the fact that the DLSE Manual is a formal compilation that evidences 20 considerable deliberafion at the highest policymaking level of the agency." Id. 21 Thus, even though this case involves Califomia law, federal authorities sfill provide useful guidance 22 in applying state law in deciding what compensation should be included in the regular rate. {Huntington 23 Mem'l Hosp. v. Superior Court (2005)131 Cal. App. 4th 893, 903). In the Fair Labor Standards Act (the 24 "FLSA") (29 U.S.C. § 201 et seq.), the "regular rate" is defined as "all remuneration for employment paid 25 to, or on behalf of, the employee ... ." (29 U.S.C. § 207(e).) 26 27 28 PLAINTIFF'S OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION 5 CASE No. 34-2017-00210560 1 IV. ARGUMENT 2 A. Cash In Lieu of Benefits Payments Paid to Employees Must Be Included in the Regular Rate as a Matter of Law 3" The FLSA, like Califomia law, requires employers to pay an overtime compensation rate of one and 4 one-half times the "regular rate of pay." (29 U.S.C. § 207(a)). The regular rate includes "all remunerafion 5 for employment paid to, or on behalf of the employee" (29 U.S.C. § 207(e)), subject to certain exclusions 6 enumerated by statute. 7 Defendant relies on the wrong exclusion in arguing that cash payments Defendant made to Plaintiff in lieu of medical benefits should not be included in the regular rate. The exclusion erroneously relied upon 9 by Defendant is found in the following definition of "Payments That Are To Be Excluded in Determining 10 'Regular Rate'" offered by the DLSE Manual: 11 contributions irrevocably made by an employer to a trustee or third person pursuant to 12 a bona fide plan for providing old-age, retirement, life, accident, or health insurance or similar benefits for employees. 13 (DLSE Manual, § 49.1.2.4 (4), citing 29 U.S. Code § 201(e)(4)). 14 This particular exclusion was recently examined in Flores, where The City of San Gabriel (the City) 15 was an employer that maintained a flexible benefits plan under which a designated monetary amount was 16 credited to each employee for the purchase of medical, vision, and dental benefits. {Flores, supra, 824 F.3d 17 890 at 896). All employees were required to use a portion of these funds to purchase vision and dental 18 benefits. {Id). However, if an employee had alternate medical coverage, he or she could opt out of using 19 the remainder of these funds to purchase medical insurance and, instead, receive the unused portion of their 20 benefits allotment as a cash payment. {Id). The City designated such payments as "benefits" and excluded 21 them when calculating employees' regular rate of pay for purposes ofovertime. {Id). The trial court mled 22 on cross-morions for partial summary judgment and held that the City's cash-in-lieu payments were not 23 properly excluded from the regular rate of pay, but that the payments f o r benefits made to the tmstees or 24 third parties were properly excluded. {Id. at 897). The trial court also found that the violation of failing to 25 include the cash-in-lieu payments was not willful. 26 On appeal, the City argued that the cash-in-lieu ofbenefits payments qualified for exclusion under 27 Section 207(e)(4) as "contributions irrevocably made by an employer to a trustee or third person 28 PLAINTIFF'S OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION 6 CASE No. 34-2017-00210560 1 pursuant to a bona fide" employee benefits plan." {Id. at 901). Although the payments were made directly 2 to employees, not to a tmstee or third person, the City claimed they "generally" satisfied the requirements 3 because they funded employee benefits, and the City "should not be penalized for administering its own 4 flexible benefits plan. {Id). The Ninth Circuit rejected this argument because the cash-in-lieu payments were 5 made to employees, finding that the plain text of Section 207(e)(4) applies only to payments made to a 6 "tmstee or third person." 7 The City's cash-in-lieu of benefits payments are not made to a trustee or third party, and therefore those payments do not meet the requirements of § 207(e)(4). We are not at liberty to add exceptions to the clear requirements set forth in the statute for payments that "generally" safisfy the requirements of that provision. This is particularly tme here, where 9 exemptions to the FLSA's requirements are to be narrowly constmed in favor of the employee. Cleveland, 420 F.3d at 988 {citing Arnold, 361 U.S. at 392). We thus have no 10 trouble concluding that the City's cash-in-lieu ofbenefits payments are not properly excluded from the regular rate of pay pursuant to § 207(e)(4). 11 {Flores, supra, 824 F.3d at 901-02). 12 In addition to holding that the City's cash-in-lieu ofbenefits payments must be included in the 13 regular rate, the Ninth Circuit reversed the district court's conclusion that the City had acted in good faith 14 in excluding the payments, and, instead, concluded that the City's overtime violations were willful. The 15 court based its willfulness finding on the fact that the City had not shown that the human resources 16 personnel who made the determinafion took any affirmative steps to ensure that the payments qualified for 17 exclusion. {Id. at 906-907). 18 B. Irrevocable Payments to Trustees or Third Parties May Be Excluded from the Regular 19 Rate If the Plan Meets the Test Set Forth in 20 C.F.R. S 778.215(a) 20 In easily concluding that the cash-in-lieu payments do not qualify for the exception provided by § 21 207(e)(4) of the FLSA, the Ninth Circuit did not analyze the percentage of cash-in-lieu payments of total 22 plan contributions. That discussion was pertinent to the different issue of whether the irrevocable benefits 23 payments made to the tmstee or third party pursuant to the plan for health benefits only were also properly 24 excluded. This different issue described as "a closer question" was decided in favor of the employer at the 25 trial court level, unlike the cash-in-lieu issue that the trial court held should have been included. 26 The Ninth Circuit ultimately reversed the trial court's mling on the closer question and held that 27 "even the City's payments to trustees or third parties under its Flexible Benefits Plan are not properly 28 excluded under § 207(e)(4)." {Id. at 903). In reaching this conclusion, the Ninth Circuit discussed at length PLAINTIFF'S OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION 7 CASE No. 34-2017-00210560 1 whether the cash-in-lieu payments were incidental to the benefits payments by assessing whether those 2 payments reached up to 20% of the employer's total contribufion amount. This factual discussion, 3 however, had nothing to do with the issue of whether cash-in-lieu payments must be included in the 4 regular rate. The Ninth Circuit had already found mled in the affirmative on this different question. 5 C. Cash-In-Lieu Payments to Plaintiff Should Not Have Been Excluded from the Regular Rate bv Defendant 6 Plaintiffs complaint alleges that Defendant failed to calculate the regular rate of employees by 7 failing to include "non-discretionary bonuses and/or other applicable remuneration when calculating regular 8 rates of pay for class members." (Consolidated Complaint, 14(E); see also id. at ^ 41) Plaintiff opposes 9 Defendant's claim that Defendant properly excluded the cash-in-lieu payments made to Plaintiff in the taxed 10 amount of $20 per month. Under Flores, these payments are the kind of "applicable remuneration" 11 referenced in the Consolidated Complaint that must be included in the regular rate. 12 1. The "MedFlxWave" Payments Are Cash in Lieu Benefits the Ninth Circuit Had 13 "No Trouble" Concluding Were Not Properly Excluded from the Regular Rate of Pay Pursuant to S 207re)(4) 14 Defendant admits Plainfiff was one of many participants in a medical and dental plan where a 15 participant was required to contribute some amount toward the cost ofbenefits, unless the participant had 16 other medical coverage. In that event, the participant was paid cash in lieu of the benefits by Defendant that 17 appeared on the employee's paystub as "MedFlxWave" if waived. {See Paystubs, Exhibit 1 to Bhowmik 18 Declaration) These payments should not have been excluded from the regular rate under Flores. 19 2. Whether "DenFlxElect" Payments Should Be Included in the Regular Rate 20 Raises a Different Issue Requiring Analysis of Whether the Plan is Bona Fide 21 In contrast to the waived medical benefits, Plainfiff elected to receive Dental benefits. These 22 payments appear on Plainfiff s paystub as "DenFlxElct." {See, e.g., Plainfiff s Wage Statements at page 23 HNCA000078, attached as Exhibit 1 to Bhowmik Decl.) Defendant did not move for summary adjudication 24 on the issue of whether Defendant properly excluded these payments that were required to be made directly 25 to the tmstee or third party for dental benefits. If that was the issue, then a discussion regarding the factors 26 set forth in code of regulation 29 C.F.R. § 778.215(a) would be warranted. Such a discussion would include 27 the factual comparison relied upon by Defendant of the total cash payments made to employees compared 28 to the payments made direcfiy to the third party. PLAINTIFF'S OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION 8 CASE No. 34-2017-00210560 1 However, as shown by the analysis used by the Ninth Circuit in Flores, the much easier question 2 of whether the cash-in-lieu payments should be included does not require an inquiry into whether Defendant 3 set up a bona fide benefits plan. As a result, the outcome of this case should mirror the mling in Flores at 4 the trial court level where the court found, "cash-in-lieu ofbenefits payments were not properly excluded 5 from its calculation of the regular rate of pay, except to the extent that the City makes payments to 6 trustees or third parties." {Flores, 824 F.3d at 896-97). 7 3. Defendant's Motion Erroneously Attempts to Apply the Test for Exclusion of Irrevocable Benefits Payments to Cash In Lieu of Benefits Defendant erroneously attempts to conflate the different issues, but the Flores decision should 9 highlight how the issue of whether the cash-in-lieu payments are excludable is easily answered in favor of 10 Plaintiff. Flores was followed by the Court in Alder v. City of Yolo where the issue of whether to include 11 cash-in-lieu payments was described as "not especially complex; indeed, liability as to the plaintiffs who 12 were paid cash in lieu of health benefits was clearly established by the Ninth Circuit's decision in 13 Flores v. City of San Gabriel, 824 F.3d 890, 901, 907 (9th Cir. 2016)." {Alder v. Cty. of Yolo, 2018 U.S. 14 Dist. LEXIS 9987, at *4 (E.D. Cal. Jan. 22, 2018)). 15 .. 4. Whether the Plan is Bona Fide Is Irrelevant to Whether Cash In Lieu Payments 16 Can Be Excluded from the Regular Rate 17 There are no exceptions to the mle that cash in lieu benefits must be included in the regular rate. 18 The holding of Flores unequivocally states as a matter of law that cash payments in lieu of health 19 benefits "must be included in the regular rate of pay and thus in the calculation of the overtime rate." 20 {Flares, supra, 824 F.3d at 895). Defendant's attempt to conflate this simple issue with the "closer 21 question" of whether to include payments made directly to a trustee is a transparent attempt to 22 confuse the issues. 23 Defendant argues at length that "the Plan qualifies as a 'bona fide' benefits plan" without ever 24 explaining how this issue is relevant to whether Defendant "properly excluded cash benefits received by 25 Plaintiff Spears in her regular rate." (Def Opp., pg. 10) There is nothing in Defendant's motion or the law 26 that stands for the proposition that cash payments made direcfiy to employees in lieu of receiving benefits 27 can be excluded from the regular rate. The "bona fide benefits plan" issue is related to the issue not raised 28 in Defendant's motion which is whether the tax free benefits can be excluded from the regular rate. PLAINTIFF'S OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION 9 CASE No. 34-2017-00210560 1 Under 20 C.F.R. § 778.215(a), Defendant's plan may be bona fide "it provides, as an incidental part 2 thereof, for the payment to an employee in cash of all or a part of the amount standing to his credit..." 3 However, the fact that the plan is bona fide does not mean that the taxed cash-in-lieu payments paid 4 to Plaintiff are allowed to be excluded from the regular rate. Such an erroneous conclusion is clearly 5 contradicted by the holding in Flores and can find no support in section 207(e)(4) of the FLSA, which only 6 allows for the exclusion of "contributions irrevocably made by an employer to a tmstee or a third person." 7 Defendant's argument is also not supported by the five conditions set forth for determining whether a plan 8 is bona fide under 29 C.F.R. § 778.215(a). This entire discussion is irrelevant to the issue of whether 9 Defendant should have included cash in lieu payments in Plainfiff s overtime payments. 10 The cash in lieu payments Defendant excluded from Plaintiffs regular rate are identical to the kind 11 of payments the trial court in Flores and the Ninth Circuit both held must be included because such 12 payments are paid directly to the employee, as opposed to a trustee or a third party. As admitted by 13 Defendant's declarant, Diane C. Rodes, when Plaintiff waived medical and/or dental coverage. Defendant 14 provided a cash benefit to Plaintiff that was reflected as a monetary line item in the 'Eamings' section of 15 the Participant's wage statement. (Rodes Declaration, *^ 7-8) Ms. Rodes even describes such payments 16 as "cash benefits in lieu of coverage" under the plan. {Id). The parties do not dispute these cash payments 17 were paid directly to employees who opted out of coverage and that Plaintiff could use this money to make 18 whatever purchases she wanted. 19 The cash in lieu payments stand in stark contrast to the benefits payments made by Defendant 20 directly to the tmstee or third party for employees who wished to receive medical or dental benefits. As 21 described by Defendant's declarant, Debbie Cola, the payments made for employees who did not waive their 22 coverage "were tracked, kept in a separate account, and used only for proper Plan purposes related to the 23 health and welfare benefits of HNCA employees..." (Colia Decl., ^ 3). These are different kinds of 24 payments that may be excluded under Section 207(e)(4) of the FLSA under certain circumstances. Unlike 25 the cash in lieu contributions that Plaintiff contends should have been included in the regular rate, 26 the benefits payments "were irrevocable...[and] HNCA was unable to recapture or divert the funds 27 for HNCA's use or benefit." (Colia Decl., ^ 4). For employees who, unlike Plainfiff, did not waive 28 medical coverage, these employees were "required to contribute some amount toward the cost of the PLAINTIFF'S OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION 10 CASE No. 34-2017-00210560 1 benefit(s) he or she selected" in the form of Flex Dollars. (Caolia Decl., ^ 9) The cash in lieu benefits, on 2 the other hand, was money Plaintiff was free to spend on anything except for medical benefits because she 3 had opted out of receiving any coverage under the Plan. 4 A claim that the irrevocable payments made to the tmstee should have been included in an 5 employee's regular rate would require proof that the enfire plan was not bona fide, but Defendant's motion 6 does not seek summary adjudication of that issue. The propriety of excluding cash-in-lieu payments is 7 the issue Defendant sought to adjudicate and the law is clear that these payments must be included 8 in the regular rate because these payments do not fall within the exclusion of Section 207(e)(4) ofthe 9 FLSA. This conclusion is consistent with the discussion in the Flores case and the relevant text is 10 highlighted in the pages 901 to the beginning of page 902 of the opinion and attached to the Bhowmik Decl. 11 as Exhibit 2 for the convenience of the Court. The discussion from Flores that Defendant is erroneously 12 conflating with the cash in lieu discussion regarding whether irrevocable payments to third parties are 13 properly excluded are in pages 902 to 903 of Flores opinion Plaintiff attaches as Exhibit 2 to the Bhowmik 14 Declaration for the Court's convenience. Plaintiff hopes this presentation ofthe case in this way will assist 15 the Court in understanding the difference between the issues.^ 16 Because the cash in lieu ofbenefits payments were paid to Plaintiff for waiving benefits, as opposed 17 to payments to a third party or tmstee for the purpose of obtaining benefits, the law could not be more clear 18 that these cash in lieu payments are bonuses that cannot be excluded from the regular rate. 19 The City urges us to find that its cash-in-lieu ofbenefits payments fall within the ambit of § 207(e)(4) even though the payments are not made to a tmstee or third party because the 20 payments "generally" meet the requirements of that subsection, arguing that it should not be penalized for administering its own flexible benefits plan. But[w]here '[a] statute's language 21 is plain, the sole funcfion of the courts is to enforce it according to its terms,' because 'courts must presume that a legislature says in a statute what it means and means in a statute what 22 it says there.'" [citations] The City's cash-in-lieu ofbenefits payments are not made to a trustee or third party, and therefore those payments do not meet the requirements 23 of § 207(e)(4). 24 (F/ora, 824F.3d901) 25 26 ^ Defendant does not rely on Section 207(e)(2) of the FLSA to claim that the cash-in-lieu payments are excluded under this provision that allows exclusion for payments that are not made as 2^ compensation for his hours of employment. As a result. Defendant cannot raise such an issue for the 2g first time in the reply. The Ninth Circuit, however, did answer this quesfion and held that cash-in-lieu payments are not properly excluded from the regular rate under this provision ofthe FLSA. PLAINTIFF'S OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION 11 CASE No. 34-2017-00210560 1 D. Defendant's Motion for Summary Adjudication Should Be Denied Based on the Failure to Provide Relevant Discovery 2 Plaintiff respectfully requests a denial on the hearing on the summary adjudication motion pursuant 3 to Code Civ. Proc, § 437c, subd. (h) with respect to any claim by Defendant that payments made directly 4 to a tmstee or third party for medical benefits were properly excluded from the regular rate. This issue not 5 raised in Defendant's motion was described by the Ninth Circuit as the "closer question" hinging on whether 6 the entire benefits plan was bona fide and the five (5) factor test set forth in 29 C.F.R. ^ 778.215(a). A 7 reason denial is requested on this claim is because Defendant submitted facts related to this inapposite test 8 as the foundation for Defendant's mofion. 9 For Plaintiff Spears, the benefits payments paid by Defendant direcfiy to the trustee or third party 10 were coded as "DenFlxElct." Plainfiff requested the payroll records for the Class Members in requests for 11 producfion numbers 20-21 and filed a mofion to compel the production of these records. A review of these 12 payroll records is needed by Plaintiff in order to be able to ascertain whether certain facts Defendant claims 13 are undisputed material facts can be disputed, including: 14 .. Fact No. 14: Theexactamount of'Flex Dollars' to which a Participant was entitled to varied 15 depending on the medical and dental plans that he or she chose, the number of dependents covered and the Participant's geographic location, but generally, the amount was less than 16 the total cost of the benefit(s) that a participant elected. 17 Fact No. 15: In a vast majority of cases, the Participant was required to contribute some amount toward the cost of the benefit(s) he or she selected, and the portion of the benefit [8 coverage was deducted from his or her paycheck. 19 Fact No. 19: In each ofthe Plan years 2013, 2014, 2015 and 2016, the total cash benefits provided to Participants who waived dental and/or medical coverage represented a very 20 small percentage of HNCA's contributions provided under the Plan for the elected dental and/or medical coverage: 1/4% in 2013, 1.3% in 2014; 0.9% in 2015; and 0.9% in 2016. 21 (Defendant's Separate Statement in Support of Motion for Summary Adjudication). 22 The discovery at issue in Plainfiff s mofion to compel the payroll records of the Class Members 23 would lead to the production of controverting evidence on the issues of whether the overall amount of Flex 24 Dollars was or was not less than the cost of the benefits that the participants elected with regard to Fact No. 25 14. This discovery would be pertinent to the issue of whether Defendant properly excluded from the 26 overtime payments the benefits payments made directly to the tmstee coded on Plaintiffs wage statement 27 as "DenFlxElct." 28 PLAINTIFF'S OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION 12 CASE No. 34-2017-00210560 1 The payroll data would also allow Plaintiff to ascertain whether in the "vast majority of cases" 2 participants had portions ofbenefits coverage deducted from his or her paycheck with regard to Fact No. 3 15. Defendant should not be permitted to object on the one hand that tuming over such discovery is 4 burdensome, while on the other hand Defendant is secrefiy reviewing and processing the same classwide 5 discovery for Defendant's own benefit. 6 The same goes for Defendant's representations in Fact No. 19 regarding the total amount of cash 7 benefits provided to all Plan Participants on a classwide basis. Plaintiff would have been able to review and 8 corroborate whether Defendant's factual claims were tme, had Defendant complied with Plainfiff s 9 discovery request for the payroll data of the Class Members. Instead, Defendant's opposition to discovery 10 leaves Plaintiff in the unfair posifion where Plaintiff has no ability to respond to this fact in the separate 11 statement. This discovery would be pertinent to the issue of whether Defendant properly excluded from the 12 overtime payments the benefits payments made directly to the tmstee coded on Plaintiffs wage statement 13 as "DenFlxElct." If Plaintiff s review of the data shows that Defendant's calculations were incorrect and 14 the cash payments were not small in comparison to Defendant's contribufions, then Plaintiff would be able 15 to argue that Defendant's plan was not bona fide such that the payments Defendant made for benefits 16 directly to the tmstee or third party should have been included in the overtime rate of pay. 17 18 V. CONCLUSION 19 For all the reasons as set forth above, Defendant's Motion for summary adjudication must be denied 20 based on Defendant's argument that cash-in-lieu benefits coded as "MedFlxWave" were properly 21 excluded from Plaintiffs regular rate. 22 Importantly, Defendant's request for summary adjudicafion does not ask for a mling on whether 23 Defendant properly excluded payments irrevocably made to a third party for employees who elected 24 coverage as coded in Plaintiff Spears' paystub as "DenFlxElct." In order to engage with the five (5) factor 25 test set forth in 29 C.F.R. Tl 778.215(a) relevant to this separate issue, Plainfiff would need Defendant to 26 comply with Plaintiffs request for the payroll data of the Class Members showing the amounts of payments 27 made for benefits compared to those made in lieu ofbenefits. The Court should, therefore, deny Defendant's 28 Mofion. PLAINTIFF'S OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION 13 CASE No. 34-2017-00210560 1 Respectfully submitted, 2 DATED: April 10, 2018 BLUMENTHAL NORDREHAUG BHOWMIK DE BLOUW LLP 3 By:_ 4 A.J. Bhowmik Attomeys for Plaintiff 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PLAINTIFF'S OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY ADJUDICATION 14 CASE No. 34-2017-00210560