Preview
-1 TIMOTHY J. LONG (STATE BAR NO. 137591)
tjlong@orrick.com
2 ORRICK, HERRINGTON & SUTCLIFFE LLP
400 Capitol Mall, Suite 3000 201 Of EB-7 P^i !:S-:
3 Sacramento, CA 95814-4497
Telephone: +1 916 447 9200
4 Facsimile: , +1 916 329 4900
5 STEPHANIE GAIL LEE (STATE BAR NO. 285379)
Stephanie. lee@orrick. com
6 ORRICK, HERRINGTON & SUTCLIFFE LLP
777 South Figueroa Street, Suite 3200
7 Los Angeles, CA 90017-5855
Telephone: +1-213-629-2020
8 Facsimile: . +1-213-612-2499
9 Attomeys for Defendant
HEALTH NET OF CALIFORNIA, INC.
10
11 SUPERIOR COURT OF THE STATE OF CALIFORNIA
12 COUNTY OF SACRAMENTO
13
ANDREA SPEARS, an individual, on behalf Consolidated CaseNo. 34-2017-00210560-
14 of herself and on behalf of all persons similarly CU-OE-GDS
situated.
15 Plaintiff, REPLY IN SUPPORT OF
DEFENDANT'S MOTION TO
16 SEQUENCE DISCOVERY
17 HEALTH NET OF CALIFORNIA, INC., a Date: February 15,2018
Califomia Corporation; and Does 1 through 50, Time: 9:30 a.m.
18 inclusive. Judge: Hon. Alan G. Perkins
Dept.: 35
19 Defendants.
Complaint Filed: April 5,2017
20 FAC Filed: June 29, 2017
Consolidated Complaint Filed: Dec. 21, 2017
21
TOMAS R. ARANA, on behalf of himself, all Complaint Filed: August 1, 2017
03 22 others similarly situated,
23 Plaintiff,
<
24
O 25 HEALTH NET OF CALIFORNIA, INC., a
a: 26
Califomia corporation; and DOES 1-50,
inclusive, \
o 27
28
Defendant.
REPLY IN SUPPORT OF DEFENDANT'S MOTION TO SEQUENCE DISCOVERY
1 1. INTRODUCTION
2 From the outset of this case, Health Net has tried to workwith opposing counsel to organize
3 and structure the litigation ofthis lawsuit in an orderly fashion. This has included working with
4 Plaintiff Arana's counsel (who has not opposed this Motion to Sequence) to transfer Plaintiff
5 Arana's case to Sacramento; then suggesting that Plaintiff Arana's lawsuit and Plaintiff Spears'
6 lawsuit be consolidated given that the cases overlap, which after court intervention, occurred late
7 last year; and trying to meet-and-confer to organize discovery in a manner that permits the parties
8 to litigate this case in an efficient manner without wasting resources.' Health Net has not been
9 motivated by gamesmanship, nor has it tried to disadvantage" Plaintiffs.
10 So, after producing thousands of pages and lines of data and every policy it could fmd that
11 was implicated by Plaintiffs' claims, as well as providing substantive responses to discovery geared
12 toward certification issues. Health Net suggested proceeding on two paths that are relevant here.
13 Health Net proposed that the parties first focus on Plaintiffs' regular rate and rounding claims that
14 are purely legal in nature - because the key facts relevant to those claims are undisputed. To that
15 end. Health Net has filed a Motion for Summary Adjudication that is scheduled to be heard by
16 Judge Krueger in late April. If Judge Krueger grants that motion, there is no need for a big chunk
17 of the discovery Plaintiff Spears is seeking now. Health Net then suggested that the parties focus
18 on class certification and whether Plaintiffs are aggrieved employees within the meaning of PAGA.
19 Health Net did so because of the burden associated with the discovery Plaintiffs propounded that
20 relates to merits, damages and class-wide issues would be completely irrelevant if the cases are not
21 certified or the Plaintiffs not aggrieved. Plaintiff Spears has vigorously resisted these efforts.
22 Plaintiff Arana has not.
23 Plaintiff Spears seems to believe that if a plaintiff in a putative class action or PAGA claim
24 asks for something, she is entitled to it. Period. That is not the law, and that is why Code of Civil
25 Procedure section 2019.020(b) ("Section 2019.020(b)") exists. When discovery requests implicate
26 •
2y ' Health Net has admittedly been only modestly successftil in working through these issues
informally with counsel for Plaintiff Spears, who seems to have a penchant for tuming disputes
28 into baseless accusations and unnecessary motions, which Judge Cadei recognized last year. See
Opening Brief at 4, n.4.
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REPLY IN SUPPORT OF DEFENDANT'S MOTION TO SEQUENCE DISCOVERY
1 issues such as burden, privacy and relevancy, trial courts are empowered by Section 2019.020(d)
2 to sequence discovery.
3 In this case, Health Net has set forth specific reasons why discovery should be sequenced
4 and backed up its position with uncontroverted evidence. Health Net has detailed the burden it
5 would face if compelled to compile and produce the discovery Plaintiffs seek. Plaintiffs have not
6 disputed or even called this showing into question. Health Net has pointed out that privacy concems
7 are implicated and proposed altematives to deal with them,'which neither Plaintiff disputes but
8 instead chooses to ignore. Health Net has produced an abundance of discovery sought by Plaintiffs
9 because it is relevant to class certification and vvhether either Plaintiff is aggrieved. Plaintiff Spears
10 does not explain how this discovery is deficient, insufficient or incomplete, or that she cannot
11 establish certification or that Plaintiffs are aggrieved without additional discovery. Health Net has
12 pointed out the marginal relevance at this stage of the proceedings of much of the discovery Plaintiff
13 Spears seeks. Rather than demonstrating how the discovery ties into her theories of recovery.
14 Plaintiff Spears cites to cases that deal with the admissibility of expert testimony from cases that
15 involve disputes not implicated by Plaintiffs' claims in this lawsuit.
16 The Court should grant Health Net's Motion because it rationally orders discovery in an
17 efficient manner, and deals appropriately with legitimate concems. Granting the motion is also
18 without prejudice to Plaintiffs. Nothing prevents them from seeldng the discovery that is in dispute
19 at the right time, if and when they certify their claims or establish that they are aggrieved.^
20 II. HEALTH NET PRODUCED SUFFICIENT PAGA- AND CERTIFICATION-
RELATED DISCOVERY.
21
22 Plaintiffs do not dispute that Health Net has already produced significant, class-wide
23 discovery directly related to their claims, including:
24 • Meal period policies for all putative class members;
25 • Employee policies, manuals and guides for all putative class members;
26 • Hourly compensation policies for all putative class members;
27.
28 ^ In making this observation. Health Net is not waiving any objections that may be appropriate to
assert when and if either Plaintiff seeks such discovery again.
REPLY IN SUPPORT OF DEFENDANT'S MOTION TO SEQUENCE DISCOVERY
1 • Bonus compensation policies for all putative class members;
2 • Policies relating to health and welfare benefits for all putative class members;
3 • Meal premium policies for all putative class members; and
4 • Overtime compensation policies for all putative class members.
5 Plaintiffs have failed to explain why this information and the other discovery Health Net has
6 provided is deficient, insufficient or incomplete and why they need additional discovery to establish
7 class certification or whether they are aggrieved.
8 III. GOOD CAUSE EXISTS TO SEQUENCE DISCOVERY.
9 A. Plaintiffs Do Not Dispute That the Discovery at Issue Is Unduly Burdensome.
10 Health Net has provided ample evidence to support its position that the discovery sought by
11 Plaintiff Spears, as well as by Plaintiff Arana who does not oppose Health Net's Motion, is
12 burdensome. Plaintiffs are seeking detailed data for nearly 5,000 individuals. Rodes Dec, ^ 2.
13 Much of the information sought is stored on a system that is no longer used by Health Net, and
14 archived information from that database is not readily accessible. Schneider Dec, ]f 3. More recent
15 payroll and timekeeping records are stored across two different databases, both of which are
16 different than the databeise used for the archived records. Id. at ^^j 3-4. Health Net has no ready-
17 to-use application to gather this information, /c/. at ^^6-8. And once gathered, the data would be
18 so large that Heath Net would need to build another tool or database to host it. Id. at \ 1. This
19 process is'complicated and time consuming./c/. at 7-8, 13-18.
20 A similar process would be required to gather wage statements because there is no ready-
21 to-use application to gather them. Id. at 10-12. Like the payroll and timekeeping information,
22 the time involved would be significant. Id.
23 Additionally, several of the interrogatories require compilation and review of an enormous
24 amount of data, plus detailed analysis and calculations that are extremely time consuming. Id. at
25 ^Tl 2-24; see also Stewart Dec, 2-5. Due to the enormous volume of infonnation at issue, it
26 would likely take, at a bare minimum, a team of three to four individuals three to six months of
27 dedicated time to complete the analyses Plaintiffs demand. Schneider Dec, 24.
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' REPLY IN SUPPORT OF DEFENDANT'S MOTION TO SEQUENCE DISCOVERY
1 Health Net has already provided a tremendous amount of written and documentary
2 discovery. While the scope of discovery is broad, it is not without limits. See Williams v. Superior
3 Court, 3 Cal. 5th 531, 549 (2017). As Williams acknowledges, trial courts may establish the
4 sequence and timing of discovery for the convenience of parties and witnesses and in the interests
5 of justice pursuant to Section 2019.020(b). M at 551. Neither Plaintiff Spears, nor Plaintiff Arana,
6 has disputed Health Net's burdensome showing. For this reason alone, good cause exists for the
7 Court to sequence discovery as Health Net has requested.
8 B. Plaintiffs Do Not Address Privacy Concerns To Relative To Payroll.
^ Timekeeping, and Wage Statement Data.
10 Plaintiffs ignore the privacy concems implicated by their requests. The timekeeping
11 records, payroll records, and wage statements they seek include personal information such as an
12 employee's selection of benefits, insurance plans, investments and even wage gamishments. See,
13 e.g., Rodes Dec, ^ 5, Exh. A. As many California courts have recognized, this type of data is
14 entitled to heightened privacy protection. See Williams, 3 Cal. 5th at 554 (employee contact
15 information is more sensitive than financial daXa); see also Belaire-West Landscape, Inc. v.
16 Superior Court, 149 Cal. App. 4th 554, 559 (2007) (observing that fmancial data is particularly
17 sensitive). "Payroll information is personal. Ask any ordinary reasonable person if he or she would
18 want their payroll information routinely disclosed to parties involved in litigation and one would
19 hear a resounding, 'No."' City ofLos Angeles v. Superior Court, 111 Cal. App. 4th 883,892 (2003).
20 Plaintiffs' silence cannot overcome Health Net's showing that the sequencing Heath Net
21 has requested will address these legitimate privacy concems. Good cause therefore exists for the
22 Court to sequence discovery so that these records are not subject to discovery until a later, perhaps
23 more appropriate time, and with appropriate protections in place, including giving putative class
24 members an opportunity to object to any such disclosures.
25 C. The Cases Cited by Plaintiff Spears as to Timekeeping and Payroll Records
Might Be Relevant to Other Cases, But Not This Lawsuit.
26
27 The cases to which Plaintiff Spears cites with respect to timekeeping and payroll records do
28 not support her position on this Motion. As a preliminary matter, both ABM Industries Overtime
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REPLY IN SUPPORT OF DEFENDANT'S MOTION TO SEQUENCE DISCOVERY •
1 Cases, 19 Cal. App. 5th 277 (2017), and Alberts v. Aurora Behavioral Health Care, 241 Cal. App.
2 4th 388 (2015), deal with the admissibility of expert testimony. That issue is not before the Court.
3 Second, the analyses at issue in those cases vvere tied to theories of recovery that do not apply in
4 this case. Califomia appellate authority is clear: courts should take into account a plaintiffs theory
5 of recovery when evaluating certification arguments. See, e.g., Sav-On Drug Stores v. Superior
6 Court, 34 Cal. 4th 319, 326 (2004) (in determining whether there is substantial evidence to support
7 a trial court's certification order, the reviewing court must consider whether the theory of recovery
8 advanced by the proponents of certification is, as an analytical matter, likely to prove amenable to
9 class treatment). In other words, "the trial court must evaluate whether the theory of recovery
10 advanced by the plaintiff is likely to prove amenable to class treatment." Ghazaryan v. Diva
11 Limousine, Ltd., 169 Cal. App. 4th 1524, 1531 (2008). That logic applies when one considers
12 PAGA claims, as well. Plaintiffs have not articulated their theories of recovery supporting their
13 disparate claims, so one cannot perform such an assessment at this time. Finally, to the extent that
14 any of the cases are relevant, they confirm that when evaluating discovery matters, courts should
15 take into consideration the types of issues and concems Health Net has raised.
16 Plainfiff Spears relies heavily on ABM Industries and Alberts. This reliance is misplaced.
17 Neither case addresses the scope of discovery where the data sought is imduly burdensome or
18 objected to via a Section 2019.020(b) Motion. ,
19 T\\Q ABM Industries cburt examined whether expert evidence should have been considered
20 by the trial court on class certification. The appellate court reversed because "the trial court's
21 wholesale exclusion of plaintiffs expert evidence in this case was error." 19 Cal. App. 5th at 248.
22 The case did not decide whether, in the first instance, plaintiff was entitled to payroll and
23 timekeeping information over objections of burden by defendant. Indeed, it is unclear whether
24 defendant objected to the production of this underlying evidence at any point in the proceeding or
25 whether defendant was burdened by its production. For some companies, providing payroll and
26 timekeeping information may be as sirnple as pressing a button—like Plaintiff Spears believes.
27 However, that is not true for Health Net, as the uncontroverted evidence siibmitted by Health Net
28 proves. ABM Industries does not stand for the proposition that plaintiffs must be given access to
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REPLY IN SUPPORT OF DEFENDANT'S MOTION TO SEQUENCE DISCOVERY ^
1 payroll and timekeeping data of putative class members prior to class certification just because they
2 ask for it, or that it is reversible error to structure discovery such that a defendant is not unduly
3 burdened.
4 In Alberts, the "central legal issues [were] whether the Hospital's alleged practice and policy
5 of (1) purposefully understaffing units while also requiring nursing staff to remain on duty unless
6 relieved resulted in classwide denial of meal and/or rest breaks and (2) altering timekeeping
7 records, requiring staff to perform work off-the-clock, and denying or discouraging employees from
8 seeking compensation owed resulted in classwide denial of overtime pay." 241 Cal. App. 4th at
9 400. The Alberts plaintiff also included allegations that management actively modified time records
10 to hide wage-and-hour violations. Id. Plaintiff Spears makes no such allegations here. Moreover,
11 unlike this case, the hospital defendant's written meal and rest break policies in Alberts, on their
12 face, failed to comply with Califomia law. Id. at 405-6. In Alberts, the timekeeping and payroll
13 information was relevant to class certification to show what common practices the company
14 actually used in the absence of a compliant policy, and because plaintiff alleged concealment of
15 violations. Id. at 417-18. Neither Plaintiff makes similar allegations. And again, the Alberts court
16 did not decide whether, in the first instance, plaintiff was entitled to payroll and timekeeping
17 information over objections of burden by defendant.
18 At most, ABM and Alberts stand for the unremarkable propositions that time and payroll
19 records are generally relevant to wage-and-hour cases. They do not, however, compel the
20 conclusion that Plaintiffs must have unfettered access to records for thousands of putative class
21 members prior to class certification, particularly when Plaintiffs (1) have not tied their requests to
22 any theory of recovery and/or their class certification or PAGA arguments, and (2) they haven't
23 even hinted that the discovery already provided is not deficient, insufficient or incomplete. ^
24 As for the unpublished district court cases cited by Plaintiff Spears, they support the general
25 proposition (and Health Net's position) that courts should take into account the concems Health
26 Net has raised when determining whether to sequence discovery in complex cases, such as this
27 consolidated acfion.
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REPLY IN SUPPORT OF DEFENDANT'S MOTION TO SEQUENCE DISCOVERY
1 Although the court in Chavez v. Petrissans, 2008 U.S. Dist. LEXIS 111596 (E.D. Cal.
2 September 5,2008), found payroll records could be relevant to class certification, it acknowledged
3 "there are also privacy concems that need to be addressed." Id. at * 11. The court balanced these
4 concems by requiring the defendant "to produce the requested information only for members who
5 wish[ed] to participate in this litigation." Id. (emphasis added). Moreover, the court noted that
6 the putative class was relatively small - only 57 individuals - so the burden on the defendant in
7 producing the records was not nearly as high as in this case. Similarly, in Culley v. Lincare, Inc.,
8 2015 U.S. Dist. LEXIS 148391 (E.D; Cal. Nov. 2, 2015), the court found privacy concems of
9 putative class members relevzint in determining whether to compel timekeeping and payroll data.
10 Id. at*S. The court weighed that the privacy concem against the burden the defendant employer
11 faced in producing the information. Id. As in Chavez, the small putative class size (45 individuals)
12 meant that the burden on defendant in producing the records was not substantial. Likewise, in
13 Gordon v. Aerotek, Inc., 2017 U.S. Dist. LEXIS 161766 (C.D. Cal. Sept. 29,2017), the court rioted
14 when ordering production of timesheets and payroll information that the defendant had not
15 established that the putative class size was large enough to cause undue burden. Id. at * 15.
16 Unlike the cases Plaintiff Spears selectively cites, the putative class in this case includes
17 nearly 5,000 individuals who have been employed by Health Net over more than a four-and-a-half
18 year period. The volume of data is so huge that Health Net has never dealt with any demands on
19 par with Plaintiff Spears's demands, and the estimated time to compile it is three to six months,
20 with a team of three to four people working on it. Schiieider Dec, ^ 24. The burden on Health Net
21 in producing such expansive documentation is incomparable to the burden of producing similar
22 documents for a putative class involving fewer than 100 employees, as in the cases Plaintiff Spears
23 cites. Not only is the burden on Health Net in this case exponentially higher, the concems for
24 protecting privacy interests for so many individuals is substantially increased. These cases do not
25 support Plaintiff Spears' position, nor do they undermine the undisputed showing Health Net has
26 made in support of this Motion.^
27
28 ^ Orozco v. III. Tool Works, Inc., 2016 U.S. Dist. LEXIS 128315 (E.D. Cal. Sept. 20, 2016), which
Plaintiff Spears also cites, did not analyze relevance, the burden on defendants or the privacy of the
. . -7-
REPLY IN SUPPORT OF DEFENDANT'S MOTION TO SEQUENCE DISCOVERY
1 D. Wage Statements Should Be Sequenced.
2 In addition to failing to address the burden and privacy concems with respect to the
3 demanded wage statements (discussed above in section III.A and III.B), the case to which Plaintiff
4 Spears cites (Gordon) is distinguishable, and not instmctive. In Gordon, the court noted when
5 ordering production of wages statements that the defendant had not established that the putative
6 class size was large enough to cause undue burden.'' Id. at *15. Here, it is undisputed that Health
7 Net bears an enormous burden to produce wage statements.
8 E. Identification of Supervisors Should Be Sequenced.
9 Plaintiff Spears fails to address the privacyrightsof supervisors. To begin with, it bears
10 mentioning that this discovery was propounded by Plaintiff Arana who does not dispute Health
11 Net's motion. For this reason alone, the Court should grant Health Net's requests. Second, there
12 is no question that seeking the contact information of each and every supervisor of each and every
13 putative class member infringes on these supervisors' privacy rights. Setting aside that many of
14 these supervisors arguably belong to Health Net's "control group" and would not be part of any
15 class Plaintiffs seek to certify (and similarly would not qualify as aggrieved employees based on
16 Plaintiffs' allegations), if the Court were to permit the discovery sought by Plaintiffs, the Court
17 would be doing so without giving these supervisors the right to object to the disclosure of their
18 personal contact information. Putative class members have that right (see Belaire- West Landscape,
19 Inc., 149 Cal. App. 4th at 561-62); why shouldn't supervisors whose interests are in conflict with
20 the individuals Plaintiffs seek to represent?
21 Moreover, Plaintiff Spears's quotation from fF/7//aiwj is misleading. Williams dxscw&sed.
22 only the contact information of allegedly aggrieved eriiployees. Williams did not address contact
23 information of supervisors or their role as potential witnesses. Finally Plaintiff Spears does not
24 explain why she cannot notice depositions of supervisors through Health Net as is normally done.
25
26
2y putative class members. The case simply reviewed the defendant's failure to comply with a prior
order bf the court. It is inapposite.
28
The court did not note the putative class size at issue.
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REPLY IN SUPPORT OF DEFENDANT'S MOTION TO SEQUENCE DISCOVERY
1 If anything, it appears that Plaintiff Spears seeks to have impermissible ex parte communications
2 with represented company managers. The Court should not permit this.
3 F. Numerical Data Should Be Sequenced. i
4 Plaintiff Spears claims she needs so called "numerical data" now. As Health Net has
5 pointed out, and Plaintiff Spears does not dispute, what is actually being sought involves
6 complicated calculations of the number of class members who received overtime compensation and
7 cash payments in lieu of health benefits during the same pay period, the number of meal period
8 premiums paid, the total dollar amount of meal period premiums paid, and much more (see Spears
9 Rogs 6, 7, 19; Arana Rogs 15-17, 19-21, 24). These interrogatories'not only require Health Net to
10 pull data in the manner described above in Section III.A, they also require that Health Net perform
11 complicated calculations with an overwhelming amount of data. This is imduly burdensome. See
12 infra Section III.A.^ And perhaps more to the point, all of this data will be completely irrelevant
13 if the Court grants Health Net's Motion for Summary Adjudication.
14 Moreover, Plaintiff Spears's assertion that this information is necessary to show damages
15 and that damages are relevant at the class certification stage is preposterous. As Brinker Restaurant
16 Corp. V. Superior Court, 53 Cal.4th 1004 (2012) made abundantly clear, the Califomia Courts of
17 Appeal "have long settled that individual damages questions will rarely i f ever stand as a bar to
18 certification." Id. at 1054. That is likely why Plaintiff Spears cites to no case supporting her
19 position. Proof of damages is simply not required for class certification. The Court should grant
20 the relief sought by Health Net as to these Interrogatories.
21 G. WilUams Does Not Prohibit Sequencing Discovery.
22 Plaintiff Spears relies heavily on Williams; however, Williams concems the discovery of
23 allegedly aggrieved employees' contact information when a defendant employer has not claimed
24 that such discovery is irrelevant, burdensome or otherwise privileged - nothing more. Williams, 3
25 Cal. 5th at 537. Second, Williams expressly acknowledged that a "trial court 'may establish the
26 sequence and timing of discovery for the convenience of the parties and witnesses and in the
27
28 ^ It bears mentioning (again) that Plaintiff Arana does not dispute Health Net's evidence or
arguments in this regard.
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REPLY IN SUPPORT OF DEFENDANT'S MOTION TO SEQUENCE DISCOVERY
1 interests of justice'" under Section 2019.020. Id. at 550-51. The Williams court noted, however,
2 that no Section 2019.020 motion had been filed in that case, so there was no occasion to consider
3 it. Id. Moreover, Williams specifically recognized that trial courts may limit discovery where it is
4 unduly burdensome and expense outweighs the utility of the information sought. Id. at 549.
5 Where, as here, the discovery at issue relates to the merits of Plaintiffs' representative
6 claims or the potential damages they may recover and it imposes an enormous burden on Health
7 Net and infringes on third-party privacy rights, disclosure should be placed on a temporary hold.
8 No Califomia case - not Williams or any other - has opened thefloodgatesfor a representative
9 plaintiffs unfettered access to expansive discovery simply because he or she has pled class claims
10 or a claim under the PAGA. Rather, the Discovery Act specifically contemplates management of
11 discovery by the trial court, especially in complex cases like this one.
12 IV. CONCLUSION
13 For all the foregoing reasons, the Court should grant Health Net's Motion to Sequence
14 Discovery.
15
16 Dated: February 7,2018 ORRICK, HERIUNGTON & SUTCLIFFE LLP
17
18
TIMOTHY J. LONG
19 Attopneys for Defendant
HEALTH NET OF CAMFORNIA, INC.
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REPLY IN SUPPORT OF DEFENDANT'S MOTION TO SEQUENCE DISCOVERY
Preview
-1 TIMOTHY J. LONG (STATE BAR NO. 137591) tjlong@orrick.com 2 ORRICK, HERRINGTON & SUTCLIFFE LLP 400 Capitol Mall, Suite 3000 201 Of EB-7 P^i !:S-: 3 Sacramento, CA 95814-4497 Telephone: +1 916 447 9200 4 Facsimile: , +1 916 329 4900 5 STEPHANIE GAIL LEE (STATE BAR NO. 285379) Stephanie. lee@orrick. com 6 ORRICK, HERRINGTON & SUTCLIFFE LLP 777 South Figueroa Street, Suite 3200 7 Los Angeles, CA 90017-5855 Telephone: +1-213-629-2020 8 Facsimile: . +1-213-612-2499 9 Attomeys for Defendant HEALTH NET OF CALIFORNIA, INC. 10 11 SUPERIOR COURT OF THE STATE OF CALIFORNIA 12 COUNTY OF SACRAMENTO 13 ANDREA SPEARS, an individual, on behalf Consolidated CaseNo. 34-2017-00210560- 14 of herself and on behalf of all persons similarly CU-OE-GDS situated. 15 Plaintiff, REPLY IN SUPPORT OF DEFENDANT'S MOTION TO 16 SEQUENCE DISCOVERY 17 HEALTH NET OF CALIFORNIA, INC., a Date: February 15,2018 Califomia Corporation; and Does 1 through 50, Time: 9:30 a.m. 18 inclusive. Judge: Hon. Alan G. Perkins Dept.: 35 19 Defendants. Complaint Filed: April 5,2017 20 FAC Filed: June 29, 2017 Consolidated Complaint Filed: Dec. 21, 2017 21 TOMAS R. ARANA, on behalf of himself, all Complaint Filed: August 1, 2017 03 22 others similarly situated, 23 Plaintiff, < 24 O 25 HEALTH NET OF CALIFORNIA, INC., a a: 26 Califomia corporation; and DOES 1-50, inclusive, \ o 27 28 Defendant. REPLY IN SUPPORT OF DEFENDANT'S MOTION TO SEQUENCE DISCOVERY 1 1. INTRODUCTION 2 From the outset of this case, Health Net has tried to workwith opposing counsel to organize 3 and structure the litigation ofthis lawsuit in an orderly fashion. This has included working with 4 Plaintiff Arana's counsel (who has not opposed this Motion to Sequence) to transfer Plaintiff 5 Arana's case to Sacramento; then suggesting that Plaintiff Arana's lawsuit and Plaintiff Spears' 6 lawsuit be consolidated given that the cases overlap, which after court intervention, occurred late 7 last year; and trying to meet-and-confer to organize discovery in a manner that permits the parties 8 to litigate this case in an efficient manner without wasting resources.' Health Net has not been 9 motivated by gamesmanship, nor has it tried to disadvantage" Plaintiffs. 10 So, after producing thousands of pages and lines of data and every policy it could fmd that 11 was implicated by Plaintiffs' claims, as well as providing substantive responses to discovery geared 12 toward certification issues. Health Net suggested proceeding on two paths that are relevant here. 13 Health Net proposed that the parties first focus on Plaintiffs' regular rate and rounding claims that 14 are purely legal in nature - because the key facts relevant to those claims are undisputed. To that 15 end. Health Net has filed a Motion for Summary Adjudication that is scheduled to be heard by 16 Judge Krueger in late April. If Judge Krueger grants that motion, there is no need for a big chunk 17 of the discovery Plaintiff Spears is seeking now. Health Net then suggested that the parties focus 18 on class certification and whether Plaintiffs are aggrieved employees within the meaning of PAGA. 19 Health Net did so because of the burden associated with the discovery Plaintiffs propounded that 20 relates to merits, damages and class-wide issues would be completely irrelevant if the cases are not 21 certified or the Plaintiffs not aggrieved. Plaintiff Spears has vigorously resisted these efforts. 22 Plaintiff Arana has not. 23 Plaintiff Spears seems to believe that if a plaintiff in a putative class action or PAGA claim 24 asks for something, she is entitled to it. Period. That is not the law, and that is why Code of Civil 25 Procedure section 2019.020(b) ("Section 2019.020(b)") exists. When discovery requests implicate 26 • 2y ' Health Net has admittedly been only modestly successftil in working through these issues informally with counsel for Plaintiff Spears, who seems to have a penchant for tuming disputes 28 into baseless accusations and unnecessary motions, which Judge Cadei recognized last year. See Opening Brief at 4, n.4. -1- REPLY IN SUPPORT OF DEFENDANT'S MOTION TO SEQUENCE DISCOVERY 1 issues such as burden, privacy and relevancy, trial courts are empowered by Section 2019.020(d) 2 to sequence discovery. 3 In this case, Health Net has set forth specific reasons why discovery should be sequenced 4 and backed up its position with uncontroverted evidence. Health Net has detailed the burden it 5 would face if compelled to compile and produce the discovery Plaintiffs seek. Plaintiffs have not 6 disputed or even called this showing into question. Health Net has pointed out that privacy concems 7 are implicated and proposed altematives to deal with them,'which neither Plaintiff disputes but 8 instead chooses to ignore. Health Net has produced an abundance of discovery sought by Plaintiffs 9 because it is relevant to class certification and vvhether either Plaintiff is aggrieved. Plaintiff Spears 10 does not explain how this discovery is deficient, insufficient or incomplete, or that she cannot 11 establish certification or that Plaintiffs are aggrieved without additional discovery. Health Net has 12 pointed out the marginal relevance at this stage of the proceedings of much of the discovery Plaintiff 13 Spears seeks. Rather than demonstrating how the discovery ties into her theories of recovery. 14 Plaintiff Spears cites to cases that deal with the admissibility of expert testimony from cases that 15 involve disputes not implicated by Plaintiffs' claims in this lawsuit. 16 The Court should grant Health Net's Motion because it rationally orders discovery in an 17 efficient manner, and deals appropriately with legitimate concems. Granting the motion is also 18 without prejudice to Plaintiffs. Nothing prevents them from seeldng the discovery that is in dispute 19 at the right time, if and when they certify their claims or establish that they are aggrieved.^ 20 II. HEALTH NET PRODUCED SUFFICIENT PAGA- AND CERTIFICATION- RELATED DISCOVERY. 21 22 Plaintiffs do not dispute that Health Net has already produced significant, class-wide 23 discovery directly related to their claims, including: 24 • Meal period policies for all putative class members; 25 • Employee policies, manuals and guides for all putative class members; 26 • Hourly compensation policies for all putative class members; 27. 28 ^ In making this observation. Health Net is not waiving any objections that may be appropriate to assert when and if either Plaintiff seeks such discovery again. REPLY IN SUPPORT OF DEFENDANT'S MOTION TO SEQUENCE DISCOVERY 1 • Bonus compensation policies for all putative class members; 2 • Policies relating to health and welfare benefits for all putative class members; 3 • Meal premium policies for all putative class members; and 4 • Overtime compensation policies for all putative class members. 5 Plaintiffs have failed to explain why this information and the other discovery Health Net has 6 provided is deficient, insufficient or incomplete and why they need additional discovery to establish 7 class certification or whether they are aggrieved. 8 III. GOOD CAUSE EXISTS TO SEQUENCE DISCOVERY. 9 A. Plaintiffs Do Not Dispute That the Discovery at Issue Is Unduly Burdensome. 10 Health Net has provided ample evidence to support its position that the discovery sought by 11 Plaintiff Spears, as well as by Plaintiff Arana who does not oppose Health Net's Motion, is 12 burdensome. Plaintiffs are seeking detailed data for nearly 5,000 individuals. Rodes Dec, ^ 2. 13 Much of the information sought is stored on a system that is no longer used by Health Net, and 14 archived information from that database is not readily accessible. Schneider Dec, ]f 3. More recent 15 payroll and timekeeping records are stored across two different databases, both of which are 16 different than the databeise used for the archived records. Id. at ^^j 3-4. Health Net has no ready- 17 to-use application to gather this information, /c/. at ^^6-8. And once gathered, the data would be 18 so large that Heath Net would need to build another tool or database to host it. Id. at \ 1. This 19 process is'complicated and time consuming./c/. at 7-8, 13-18. 20 A similar process would be required to gather wage statements because there is no ready- 21 to-use application to gather them. Id. at 10-12. Like the payroll and timekeeping information, 22 the time involved would be significant. Id. 23 Additionally, several of the interrogatories require compilation and review of an enormous 24 amount of data, plus detailed analysis and calculations that are extremely time consuming. Id. at 25 ^Tl 2-24; see also Stewart Dec, 2-5. Due to the enormous volume of infonnation at issue, it 26 would likely take, at a bare minimum, a team of three to four individuals three to six months of 27 dedicated time to complete the analyses Plaintiffs demand. Schneider Dec, 24. 28 • • . -3- ' REPLY IN SUPPORT OF DEFENDANT'S MOTION TO SEQUENCE DISCOVERY 1 Health Net has already provided a tremendous amount of written and documentary 2 discovery. While the scope of discovery is broad, it is not without limits. See Williams v. Superior 3 Court, 3 Cal. 5th 531, 549 (2017). As Williams acknowledges, trial courts may establish the 4 sequence and timing of discovery for the convenience of parties and witnesses and in the interests 5 of justice pursuant to Section 2019.020(b). M at 551. Neither Plaintiff Spears, nor Plaintiff Arana, 6 has disputed Health Net's burdensome showing. For this reason alone, good cause exists for the 7 Court to sequence discovery as Health Net has requested. 8 B. Plaintiffs Do Not Address Privacy Concerns To Relative To Payroll. ^ Timekeeping, and Wage Statement Data. 10 Plaintiffs ignore the privacy concems implicated by their requests. The timekeeping 11 records, payroll records, and wage statements they seek include personal information such as an 12 employee's selection of benefits, insurance plans, investments and even wage gamishments. See, 13 e.g., Rodes Dec, ^ 5, Exh. A. As many California courts have recognized, this type of data is 14 entitled to heightened privacy protection. See Williams, 3 Cal. 5th at 554 (employee contact 15 information is more sensitive than financial daXa); see also Belaire-West Landscape, Inc. v. 16 Superior Court, 149 Cal. App. 4th 554, 559 (2007) (observing that fmancial data is particularly 17 sensitive). "Payroll information is personal. Ask any ordinary reasonable person if he or she would 18 want their payroll information routinely disclosed to parties involved in litigation and one would 19 hear a resounding, 'No."' City ofLos Angeles v. Superior Court, 111 Cal. App. 4th 883,892 (2003). 20 Plaintiffs' silence cannot overcome Health Net's showing that the sequencing Heath Net 21 has requested will address these legitimate privacy concems. Good cause therefore exists for the 22 Court to sequence discovery so that these records are not subject to discovery until a later, perhaps 23 more appropriate time, and with appropriate protections in place, including giving putative class 24 members an opportunity to object to any such disclosures. 25 C. The Cases Cited by Plaintiff Spears as to Timekeeping and Payroll Records Might Be Relevant to Other Cases, But Not This Lawsuit. 26 27 The cases to which Plaintiff Spears cites with respect to timekeeping and payroll records do 28 not support her position on this Motion. As a preliminary matter, both ABM Industries Overtime -4- REPLY IN SUPPORT OF DEFENDANT'S MOTION TO SEQUENCE DISCOVERY • 1 Cases, 19 Cal. App. 5th 277 (2017), and Alberts v. Aurora Behavioral Health Care, 241 Cal. App. 2 4th 388 (2015), deal with the admissibility of expert testimony. That issue is not before the Court. 3 Second, the analyses at issue in those cases vvere tied to theories of recovery that do not apply in 4 this case. Califomia appellate authority is clear: courts should take into account a plaintiffs theory 5 of recovery when evaluating certification arguments. See, e.g., Sav-On Drug Stores v. Superior 6 Court, 34 Cal. 4th 319, 326 (2004) (in determining whether there is substantial evidence to support 7 a trial court's certification order, the reviewing court must consider whether the theory of recovery 8 advanced by the proponents of certification is, as an analytical matter, likely to prove amenable to 9 class treatment). In other words, "the trial court must evaluate whether the theory of recovery 10 advanced by the plaintiff is likely to prove amenable to class treatment." Ghazaryan v. Diva 11 Limousine, Ltd., 169 Cal. App. 4th 1524, 1531 (2008). That logic applies when one considers 12 PAGA claims, as well. Plaintiffs have not articulated their theories of recovery supporting their 13 disparate claims, so one cannot perform such an assessment at this time. Finally, to the extent that 14 any of the cases are relevant, they confirm that when evaluating discovery matters, courts should 15 take into consideration the types of issues and concems Health Net has raised. 16 Plainfiff Spears relies heavily on ABM Industries and Alberts. This reliance is misplaced. 17 Neither case addresses the scope of discovery where the data sought is imduly burdensome or 18 objected to via a Section 2019.020(b) Motion. , 19 T\\Q ABM Industries cburt examined whether expert evidence should have been considered 20 by the trial court on class certification. The appellate court reversed because "the trial court's 21 wholesale exclusion of plaintiffs expert evidence in this case was error." 19 Cal. App. 5th at 248. 22 The case did not decide whether, in the first instance, plaintiff was entitled to payroll and 23 timekeeping information over objections of burden by defendant. Indeed, it is unclear whether 24 defendant objected to the production of this underlying evidence at any point in the proceeding or 25 whether defendant was burdened by its production. For some companies, providing payroll and 26 timekeeping information may be as sirnple as pressing a button—like Plaintiff Spears believes. 27 However, that is not true for Health Net, as the uncontroverted evidence siibmitted by Health Net 28 proves. ABM Industries does not stand for the proposition that plaintiffs must be given access to -5- . REPLY IN SUPPORT OF DEFENDANT'S MOTION TO SEQUENCE DISCOVERY ^ 1 payroll and timekeeping data of putative class members prior to class certification just because they 2 ask for it, or that it is reversible error to structure discovery such that a defendant is not unduly 3 burdened. 4 In Alberts, the "central legal issues [were] whether the Hospital's alleged practice and policy 5 of (1) purposefully understaffing units while also requiring nursing staff to remain on duty unless 6 relieved resulted in classwide denial of meal and/or rest breaks and (2) altering timekeeping 7 records, requiring staff to perform work off-the-clock, and denying or discouraging employees from 8 seeking compensation owed resulted in classwide denial of overtime pay." 241 Cal. App. 4th at 9 400. The Alberts plaintiff also included allegations that management actively modified time records 10 to hide wage-and-hour violations. Id. Plaintiff Spears makes no such allegations here. Moreover, 11 unlike this case, the hospital defendant's written meal and rest break policies in Alberts, on their 12 face, failed to comply with Califomia law. Id. at 405-6. In Alberts, the timekeeping and payroll 13 information was relevant to class certification to show what common practices the company 14 actually used in the absence of a compliant policy, and because plaintiff alleged concealment of 15 violations. Id. at 417-18. Neither Plaintiff makes similar allegations. And again, the Alberts court 16 did not decide whether, in the first instance, plaintiff was entitled to payroll and timekeeping 17 information over objections of burden by defendant. 18 At most, ABM and Alberts stand for the unremarkable propositions that time and payroll 19 records are generally relevant to wage-and-hour cases. They do not, however, compel the 20 conclusion that Plaintiffs must have unfettered access to records for thousands of putative class 21 members prior to class certification, particularly when Plaintiffs (1) have not tied their requests to 22 any theory of recovery and/or their class certification or PAGA arguments, and (2) they haven't 23 even hinted that the discovery already provided is not deficient, insufficient or incomplete. ^ 24 As for the unpublished district court cases cited by Plaintiff Spears, they support the general 25 proposition (and Health Net's position) that courts should take into account the concems Health 26 Net has raised when determining whether to sequence discovery in complex cases, such as this 27 consolidated acfion. 28 -6- REPLY IN SUPPORT OF DEFENDANT'S MOTION TO SEQUENCE DISCOVERY 1 Although the court in Chavez v. Petrissans, 2008 U.S. Dist. LEXIS 111596 (E.D. Cal. 2 September 5,2008), found payroll records could be relevant to class certification, it acknowledged 3 "there are also privacy concems that need to be addressed." Id. at * 11. The court balanced these 4 concems by requiring the defendant "to produce the requested information only for members who 5 wish[ed] to participate in this litigation." Id. (emphasis added). Moreover, the court noted that 6 the putative class was relatively small - only 57 individuals - so the burden on the defendant in 7 producing the records was not nearly as high as in this case. Similarly, in Culley v. Lincare, Inc., 8 2015 U.S. Dist. LEXIS 148391 (E.D; Cal. Nov. 2, 2015), the court found privacy concems of 9 putative class members relevzint in determining whether to compel timekeeping and payroll data. 10 Id. at*S. The court weighed that the privacy concem against the burden the defendant employer 11 faced in producing the information. Id. As in Chavez, the small putative class size (45 individuals) 12 meant that the burden on defendant in producing the records was not substantial. Likewise, in 13 Gordon v. Aerotek, Inc., 2017 U.S. Dist. LEXIS 161766 (C.D. Cal. Sept. 29,2017), the court rioted 14 when ordering production of timesheets and payroll information that the defendant had not 15 established that the putative class size was large enough to cause undue burden. Id. at * 15. 16 Unlike the cases Plaintiff Spears selectively cites, the putative class in this case includes 17 nearly 5,000 individuals who have been employed by Health Net over more than a four-and-a-half 18 year period. The volume of data is so huge that Health Net has never dealt with any demands on 19 par with Plaintiff Spears's demands, and the estimated time to compile it is three to six months, 20 with a team of three to four people working on it. Schiieider Dec, ^ 24. The burden on Health Net 21 in producing such expansive documentation is incomparable to the burden of producing similar 22 documents for a putative class involving fewer than 100 employees, as in the cases Plaintiff Spears 23 cites. Not only is the burden on Health Net in this case exponentially higher, the concems for 24 protecting privacy interests for so many individuals is substantially increased. These cases do not 25 support Plaintiff Spears' position, nor do they undermine the undisputed showing Health Net has 26 made in support of this Motion.^ 27 28 ^ Orozco v. III. Tool Works, Inc., 2016 U.S. Dist. LEXIS 128315 (E.D. Cal. Sept. 20, 2016), which Plaintiff Spears also cites, did not analyze relevance, the burden on defendants or the privacy of the . . -7- REPLY IN SUPPORT OF DEFENDANT'S MOTION TO SEQUENCE DISCOVERY 1 D. Wage Statements Should Be Sequenced. 2 In addition to failing to address the burden and privacy concems with respect to the 3 demanded wage statements (discussed above in section III.A and III.B), the case to which Plaintiff 4 Spears cites (Gordon) is distinguishable, and not instmctive. In Gordon, the court noted when 5 ordering production of wages statements that the defendant had not established that the putative 6 class size was large enough to cause undue burden.'' Id. at *15. Here, it is undisputed that Health 7 Net bears an enormous burden to produce wage statements. 8 E. Identification of Supervisors Should Be Sequenced. 9 Plaintiff Spears fails to address the privacyrightsof supervisors. To begin with, it bears 10 mentioning that this discovery was propounded by Plaintiff Arana who does not dispute Health 11 Net's motion. For this reason alone, the Court should grant Health Net's requests. Second, there 12 is no question that seeking the contact information of each and every supervisor of each and every 13 putative class member infringes on these supervisors' privacy rights. Setting aside that many of 14 these supervisors arguably belong to Health Net's "control group" and would not be part of any 15 class Plaintiffs seek to certify (and similarly would not qualify as aggrieved employees based on 16 Plaintiffs' allegations), if the Court were to permit the discovery sought by Plaintiffs, the Court 17 would be doing so without giving these supervisors the right to object to the disclosure of their 18 personal contact information. Putative class members have that right (see Belaire- West Landscape, 19 Inc., 149 Cal. App. 4th at 561-62); why shouldn't supervisors whose interests are in conflict with 20 the individuals Plaintiffs seek to represent? 21 Moreover, Plaintiff Spears's quotation from fF/7//aiwj is misleading. Williams dxscw&sed. 22 only the contact information of allegedly aggrieved eriiployees. Williams did not address contact 23 information of supervisors or their role as potential witnesses. Finally Plaintiff Spears does not 24 explain why she cannot notice depositions of supervisors through Health Net as is normally done. 25 26 2y putative class members. The case simply reviewed the defendant's failure to comply with a prior order bf the court. It is inapposite. 28 The court did not note the putative class size at issue. -8- REPLY IN SUPPORT OF DEFENDANT'S MOTION TO SEQUENCE DISCOVERY 1 If anything, it appears that Plaintiff Spears seeks to have impermissible ex parte communications 2 with represented company managers. The Court should not permit this. 3 F. Numerical Data Should Be Sequenced. i 4 Plaintiff Spears claims she needs so called "numerical data" now. As Health Net has 5 pointed out, and Plaintiff Spears does not dispute, what is actually being sought involves 6 complicated calculations of the number of class members who received overtime compensation and 7 cash payments in lieu of health benefits during the same pay period, the number of meal period 8 premiums paid, the total dollar amount of meal period premiums paid, and much more (see Spears 9 Rogs 6, 7, 19; Arana Rogs 15-17, 19-21, 24). These interrogatories'not only require Health Net to 10 pull data in the manner described above in Section III.A, they also require that Health Net perform 11 complicated calculations with an overwhelming amount of data. This is imduly burdensome. See 12 infra Section III.A.^ And perhaps more to the point, all of this data will be completely irrelevant 13 if the Court grants Health Net's Motion for Summary Adjudication. 14 Moreover, Plaintiff Spears's assertion that this information is necessary to show damages 15 and that damages are relevant at the class certification stage is preposterous. As Brinker Restaurant 16 Corp. V. Superior Court, 53 Cal.4th 1004 (2012) made abundantly clear, the Califomia Courts of 17 Appeal "have long settled that individual damages questions will rarely i f ever stand as a bar to 18 certification." Id. at 1054. That is likely why Plaintiff Spears cites to no case supporting her 19 position. Proof of damages is simply not required for class certification. The Court should grant 20 the relief sought by Health Net as to these Interrogatories. 21 G. WilUams Does Not Prohibit Sequencing Discovery. 22 Plaintiff Spears relies heavily on Williams; however, Williams concems the discovery of 23 allegedly aggrieved employees' contact information when a defendant employer has not claimed 24 that such discovery is irrelevant, burdensome or otherwise privileged - nothing more. Williams, 3 25 Cal. 5th at 537. Second, Williams expressly acknowledged that a "trial court 'may establish the 26 sequence and timing of discovery for the convenience of the parties and witnesses and in the 27 28 ^ It bears mentioning (again) that Plaintiff Arana does not dispute Health Net's evidence or arguments in this regard. -9- REPLY IN SUPPORT OF DEFENDANT'S MOTION TO SEQUENCE DISCOVERY 1 interests of justice'" under Section 2019.020. Id. at 550-51. The Williams court noted, however, 2 that no Section 2019.020 motion had been filed in that case, so there was no occasion to consider 3 it. Id. Moreover, Williams specifically recognized that trial courts may limit discovery where it is 4 unduly burdensome and expense outweighs the utility of the information sought. Id. at 549. 5 Where, as here, the discovery at issue relates to the merits of Plaintiffs' representative 6 claims or the potential damages they may recover and it imposes an enormous burden on Health 7 Net and infringes on third-party privacy rights, disclosure should be placed on a temporary hold. 8 No Califomia case - not Williams or any other - has opened thefloodgatesfor a representative 9 plaintiffs unfettered access to expansive discovery simply because he or she has pled class claims 10 or a claim under the PAGA. Rather, the Discovery Act specifically contemplates management of 11 discovery by the trial court, especially in complex cases like this one. 12 IV. CONCLUSION 13 For all the foregoing reasons, the Court should grant Health Net's Motion to Sequence 14 Discovery. 15 16 Dated: February 7,2018 ORRICK, HERIUNGTON & SUTCLIFFE LLP 17 18 TIMOTHY J. LONG 19 Attopneys for Defendant HEALTH NET OF CAMFORNIA, INC. 20 21 22 23 24 25 26 27 28 -10- REPLY IN SUPPORT OF DEFENDANT'S MOTION TO SEQUENCE DISCOVERY