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1 TIMOTHY J. LONG (STATE BAR NO. 137591)
tjlong@orrick.com
2 NICHOLAS J. HORTON (STATE BAR NO. 289417)
nhorton@orrick.com
3 ORRICK, HERRINGTON & SUTCLIFFE LLP
400 Capitol Mall, Suite 3000 iO'mr Y OF s' 7^- '^OR^VA
4 Sacramento, CA 95814-4497
Telephone: +1 916 447 8299
5 Facsimile: +1 916 329 4900
6 ANNIE H. CHEN (STATE BAR NO. 292032)
annie.chen@orrick.com
7 ORRICK, HERRINGTON & SUTCLIFFE LLP
777 South Figueroa Street, Suite 3200
8 Los Angeles, CA 90017-5855
Telephone: +1-213-629-2020
9 Facsimile: +1-213-612-2499
10 Attorneys for Defendant
HEALTH NET OF CALIFORNIA, INC.
11
12 SUPERIOR COURT OF THE STATE OF CALIFORNIA
13 COUNTY OF SACRAMENTO
14 ANDREA SPEARS, an individual, on behalf Consolidated Case No. 34-2017-00210560-
of herself and on behalf of all persons similarly CU-OE-GDS
15 situated.
Plaintiff, DEFENDANT HEALTH NET OF
16 CALIFORNIA, INC.'S COMPENDIUM
OF EVIDENCE IN SUPPORT OF ITS
17 AMENDED REPLY TO ITS MOTION
HEALTH NET OF CALIFORNIA, INC., a FOR SUMMARY ADJUDICATION
18 California Corporafion; and Does 1 through 50,
inclusive, Date: September 27, 2018
19 Time: 9:00 a.m.
Defendants. Dept.: 54
20
Complaint Filed: April 5, 2017
-J 21 TOMAS R. ARANA, on behalf of himself, all FAC Filed: June 29, 2017
<
others similarly situated. Complaint Filed: August 1, 2017
22 Plaintiff,
CD 23
GC Consolidated Complaint Filed: Dec. 21, 2017
O 24 HEALTH OF CALIFORNIA, INC., a
a 25
26
California corporation; and DOES 1-50,
inclusive.
Defendant.
.27
28
DEFENDANT OF HEALTH NET OF CALIFORNIA, INC.'S COMPENDIUM OF EVIDENCE IN SUPPORT OF ITS AMENDED REPLY
TO ITS MOTION FOR SUMMARY ADJUDICATION
1 Pursuant to California Rule of Court 3.1350(g), Defendant Health Net of California, Inc.
2 ("HNCA") submits the following evidence in support of its Amended Reply to its Motion for
3 Summary Adjudication:
4 Evidence Tab
5 Declarafion of Timothy J. Long in Support of Defendant HNCA's
Amended Reply to Its Motion for Summary Adjudication. 1
Exhibit A - Copy of Plainfiffs Original Responsive Separate Statement of
7 Disputed Material Facts and Addifional Facts in Opposifion to HNCA's
Mofion for Summary Adjudication
8 " Exhibit B - Copy of the Court's May 30, 2018 Minute Order
9
Exhibit C - Copy of Plainfiff Spears' Notice of Deposifion of HNCA's
IQ Person Most Knowledgeable
11 Declarafion of Diane C. Rodes in Support of Defendant HNCA's Amended Reply
to Its Motion for Summary Adjudicafion.
12
Exhibit A - Copy of an exemplar Wellness Incentive Program policy in
13 effect during the class period
14
15
16 Dated: September 14,2018 ORRICK, HERRINGTON & SUTCLIFF^LP
17
18
TIMOTHY/r. LONG
19 Attorneys fon Defendant
HEALTH NET OF CALIEQRNfA, INC.
20 "
21
22
23
24
25
26
27
2« -1-
DEFENDANT OF HEALTH NET OF CALIFORNIA, INC.'S COMPENDIUM OF EVIDENCE IN SUPPORT OF iTS AMENDED REPLY
TO ITS MOTION FOR SUMMARY ADJUDICATION
TAB 1
1 TIMOTHY J. LONG (STATE BAR NO. 137591)
tjlong@orrick.com
2 NICHOLAS J. HORTON (STATE BAR NO. 289417)
nhorton@orrick.com
3 ORRICK, HERRINGTON &, SUTCLIFFE LLP
4.00 Capitol Mall, Suite 3000
4 Sacramento, CA 95814-4497
Telephone: +1 916 447 8299
5 Facsimile: +1 916 329 4900
6 ANNIE H. CHEN (STATE BAR NO. 292032)
annie.chen@orrick.com
7 ORRICK, HERRINGTON & SUTCLIFFE LLP
777 South Figueroa Street, Suite 3200
8 Los Angeles, CA 90017-5855
Telephone: +1-213-629-2020
9 Facsimile: +1-213-612-2499
10 Attorneys for Defendant
HEALTH NET OF CALIFORNIA, INC.
11
SUPERIOR COURT OF THE STATE OF CALIFORNIA
12
COUNTY OF SACRAMENTO
13 ANDREA SPEARS, an individual, on behalf ConsoHdated Case No. 34-2017-00210560-
of herself and on behalf of all persons CU-OE-GDS
14 similarly situated,
Plainfiff, DECLARATION OF TIMOTHY J.
15 LONG IN SUPPORT OF DEFENDANT
HEALTH NET OF CALIFORNIA, INC'S
16 AMENDED REPLY TO ITS MOTION
HEALTH NET OF CALIFORNIA, INC., a FOR SUMMARY ADJUDICATION
17 California Corporation; and Does 1 through Date: September 27, 2018
50, inclusive. Time: 9:00 a.m.
18 Dept: 54
Defendants.
19 Complaint Filed: April 5, 2017
20 FAC Filed: June 29,2017
Complaint Filed: August 1,2017
TOMAS R. ARANA, on behalf of himself, all
21 others similarly situated, Consolidated Complaint Filed: Dec. 21,2017
22 Plainfiff,
23 V.
24 HEALTH NET OF CALIFORNIA, INC., a
California corporation; and DOES 1-50,
25 inclusive,
26 Defendant.
27
28
DECLARATION OF TIMOTHY J. LONG ISO DEFENDANT HEALTH NET OF CALIFORNIA, INC.'S AMENDED REPLY TO ITS
MOTION FOR SUMMARY ADJUDICATION
1 I , Timothy J. Long, hereby declare as follows:
2 1. I am an attorney duly admitted to pracfice before the courts of the State of California
3 and a partner in the law firm of Orrick, Herrington & Sutcliffe LLP, attorneys of record for
4 Defendant Health Net of California, Inc. ("HNCA"). I make this declarafion on personal
5 knowledge and, if sworn as a witness, could competently testify to the following facts except where
6 otherwise indicated.
7 2. On February 5,2018, HNCA filed its Motion for Summary Adjudicafion
8 ("MSA").
9 3. On April 11, 2018, Plaintiff Spears opposed the MSA. In her original opposifion
10 papers, Plainfiff Spears conceded 16 of the 22 of HNCA's Undisputed Facts ("UFs") relating to
11 HNCA's Health and Welfare Plan ("the Plan"). Attached hereto as Exhibit A is a true and correct
12 copy of Plaintiff Spears' original Responsive Separate Statement of Disputed Material Facts and
13 Addifional Facts in opposition to HNCA's MSA. In her original opposifion papers. Plaintiff
14 Spears also requested that the hearing on the MSA be confinued pursuant to Code of Civil
15 Procedure 437c, subdivision (h). Plaintiff Spears claimed that the confinuance was necessary
16 because HNCA had not provided discovery that she claimed was required for the Opposifion,
17 specifically to dispute HNCA's UF Nos. 14, 15, and 19. Plaintiff Spears requested a confinuance
18 to allow her then-pending mofion to compel responses to Request for Production 20-21 ("RFPs
19 20-21") relafing to time and payroll records to be ruled upon first.
20 ~ 4. HNCA filed its Reply in support of its MSA on April 20, 2018.
21 5. On May 30, 2018, the Court granted a limited discovery-related continuance on
22 HNCA's MSA based on Plaintiff Spears' claim that she needed payroll records that were
23 "essenfial" to opposing specific UFs No. 14,15, and 19. Attached hereto as Exhibit B is a true
24 and correct copy of the Court's May 30, 2018 Minute Order.
25 6. The parties met and conferred and HNCA agreed to and did produce the discovery
26 Plaintiff Spears sought through RFPs 20-21. HNCA produced electronic time and payroll records
27 on July 6, 2018.
28
DECLARATION OF TIMOTHY J. LONG ISO DEFENDANT HEALTH NET OF CALIFORNIA, INC.'S AMENDED REPLY TO ITS
MOTION FOR SUMMARY ADJUDICATION
1 7. On April 3, 2018, Plainfiff Spears noficed the deposition of HNCA's Person Most
2 Knowledgeable ("PMK"). Plaintiff Spears' Nofice of Deposifion of HNCA's PMK requested a
3 P M K relating to the topic of "[HNCA's] policies v/ith respect to providing cash payments in lieu
4 of health benefits to the Plainfiffs." (Emphasis added.) HNCA designated Diane Rodes, Director
5 of Human Resources for Health Net, Inc., who is familiar with the human resources funcfion of
6 HNCA as well as its policies, as the PMK for this category, and she was deposed on May 2, 2018.
7 Plainfiffs did not seek to depose a PMK who could tesfify as to the mechanics of the health and
8 welfare plan HNCA had adopted for the benefit of its employees, and Ms. Rodes was not
9 designated as the PMK regarding the mechanics of the Plan and how the Plan worked. Attached
10 hereto as Exhibit C is a true and correct copy of Plainfiff Spears' Nofice of Deposifion of
11 HNCA's PMK.
12
13 I declare under the penalty of perjury under the laws of the State of California and that the
14 foregoing is true and correct. Executed this 14th day of September, 2018.
15
16
17
18
19
20
21
22
23
24
25
26
27
28
DECLARATION OF TIMOTHY J. LONG ISO DEFENDANT HEALTH NET OF CALIFORNIA, INC.'S AMENDED REPLY TO ITS
MOTION FOR SUMMARY ADJUDICATION
EXHIBIT A
FILED
1 BLUMENTHAL NORDRJSHAUG BHOWMIK DE BLOUW LLP
ENDORSED
Norman Blumenthal (SBN 068687) 2013 APR 11 PH 1:1,0
2 Kyle R. Nordrehaug (SBN 205975)
Aparajit Bhowmik (SEN 248066)
3 Piya Mukherjee (SBN 274217)
Jeffrey S. Herman (SBN 280058)
4 2255 Calle Clara
U Jolla, California 92037
5 Telephone: (858) 551-1223
Facsimile: (858)551-1232
6
Attorneys for Plaintiff
7
8
9
SUPERIOR COURT OF THE STATE OF CALIFORNIA
10
COUNTY OF SACRAMENTO
11
12
ANDREA SPEARS, an individual, on behalf of Case No. 34-2017-00210560-CU-OE-GDS
13 herself and on behalf of all persons similarly situated,
CLASS ACTION
14 Plaintiff,
PLAINTIFFS RESPONSIVE SEPARATE
15 vs. STATEMENT OF DISPUTED MATERIAL
FACTS AND ADDITIONAL FACTS IN
16 HEALTH NET OF CALIFORNIA, INC., a California OPPOSITION TO DEFENDANT'S MOTION
Corporation; and Does 1 through 50, Inclusive, FOR SUMMARY JUDGMENT OR, IN THE
17 ALTERNATIVE, SUMMARY
Defendants. ADJUDICATION
18
Reservation No. 2313007
19
TOMAS R. ARANA, on behalf of himself, all others Hearing Date: April 26, 2018
20 similarly situated,
Hearing Time: 9:00 a.m.
21 Plaintiff, Judge: Hon. Steven H. Rodda
Dept.: 54
22 vs.
Action Filed: April 5, 2017
23 HEALTH NET OF CALIFORNIA, INC., a California
corporation; and DOES 1 through 50, inclusive.
24
25
Defendants.
26
27
28
PLAINTIFF'S RESPONSIVE SEPARATE STATEMENT OF DISPUTED MATERIAL FACTS AND ADDITIONAL
FACTS IN OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY JUDGMENT OR, IN THE
ALTERNATIVE. SUMMARY ADJUDICATION
43g66436v.3
1 Pursuant to Code of Civil Procedure Section 437c(b) and California Rule of Court 3.1350(d), Plaintiff
2 herebys submit her Responsive Separate Statement Of Dispute Material Facts In Opposition to Defendant's
3 Motion For Summary Judgment or, Alternatively, Summary Adjudication.
4 I. THIRD CAUSE OF ACTION FOR FAILURE TO PAY HOURLY WAGES AND FAILURE
5 TO PAY OVERTIME WAGES
6 Issue 1: PlaintifTs' Failure to Pay Overtime Wages claim premised on HNCA's alleged failure to
include cash benefits received in lieu of medical payment in Plaintiff Spears' regular rate of pay falls
7 because cash benefits were properly excluded from her regular rate calculation under the Benefit-Plan
ContributionsException.
8
9 Pefendiuit||U^^ 'E^iiitifl^^1i^p8nse&^
'Mymice'.M:!^'^^^{:.:^^^: fci\^f ^ ••••••.r•.•-i' -.'^'-^- •• ' r'\''fr.'-. • "- ••i-iib' ,^••-••.'-^^r^:
.•..;;T./-,, • ,r..:: .-.ii.-.r..-' .'.
:. -'^:'<•i^>'.^^v-.i4"--
^-.Xa^.ir:::s
10 1. Plaintiff Spears served as a non-exempt 1. Undisputed.
HNCA customer service representative
11 from September 2014 to October 2016
in Rancho Cordova.
12
13 Declaration of Diane C. Rodes (hereinafter
"Rodes Dec") 113.
14 2. Plaintiff Arana began working out of the 2. Undisputed.
Rancho Cordova call center in 2008 and
15 continues to work there now. He started
as a non-exempt customer service
16 representative for HNCA unril his
17 promotion on or about November 14,
2015 to Contact Center Analyst, an
18 exempt position. Since June 2017,
Plaintiff Artana has been working as a
19 Call Center Systems Analyst I, also an
exempt p>osition.
20
21 Rodes Dec. H 3
3. Between January 1, 2001 and December 3.
22 31,2016, HNI sponsored a cafeteria
plan - a written health and welfare plan-
23 called the "Health Net, Inc. Associates
Benefit Program" (the "Plan"), which
24 HNCA adopted for the benefit of its
25 employees.
26 Declaration of Debbie Colia ("Colia Dec"), ^ 2,
Exhs. A-I.
27
28
DEFENDANTS' SEPARATE STATEMENT OF UNDISPUTED FACTS IN SUPPORT OF MSJ/MSA
43866436V.3
I 4. The Plan was governed by Section 125 4. Undisputed.
of the Internal Revenue Code, was
2 subject to the Employee Retirement
3 Income Security Act, and was overseen
by a Benefits Committee.
4
Colia Dec, 113.
5 5. As called for in the Plan, the Benefits 5. Undisputed.
Committee had fiduciary duties and
6
responsibilities to ensure that HNCA's
7 employer contributions to the Plan were
tracked, kept in a separate account, and
8 used only for proper Plan purpose
related to the health and welfare benefits
9 ofHNCA employees, including Plaintiffs
and their dependents.
10
Colia Dec, 114.
11
6, HNI nreated HNCA as a third party for 6. Undisputed.
12 purposes of administering the plan and
vice versa
13
Colia Dec, H 4.
14 7. Pursuant to the terms of the Plan, HNCA 7. Undisputed.
paid the actual costs of benefits under the
15
plan for its eligible employees who
16 elected to participate ("Participants"),
including Plaintiffs, and their dependents.
17
Colia Dec, 14.
18 8. Pursuant to a funded arrangement 8. Undisputed.
between HNI and HNCA, HNCA
19 arranged for the monies used to pay the
20 actual costs ofbenefits to be deposited
into an account maintained and
21 controlled by HNI as the Plan's sponsor.
22 Colia Dec, 114.
9. The contributions made by HNCA 9. Undisputed.
23 pursuant to the Plan were irrevocable -
once the contributions were made to
24
HNI, HNCA was unable to recapture or
25 divert the funds for HNCA's use or
benefit.
26
Colia Dec, H 4.
27 10. The benefits available under the Plan, 10. Undisputed.
including the various coverage options
28 and co-payments a Participant was
DEFENDANTS' SEPARATE STATEMENT OF UNDISPUTED FACTS IN SUPPORT OF MSJ/MSA
'438G6436V.3
i responsible for with respect to the Plan's
various covered services and supplies,
2 were explained in detail to HNCA
3 employees in Summary Plan
Descriptions (the "Plan SPD") and
4 Evidence of Coverage ("EOC")
documents.
5
Colia Dec, HU 5-6, Exs. K-L
6 11. The Plan provided "core" benefit to 11. Undisputed.
7 Participants such as basic life and basic
AD&D insurance at no cost to the
8 Participants.
9 Colia Dec,11115-7, Exs. K-L.
12. It also provided "optional" benefits to 12. Undisputed.
10 Participants and/or their dependents,
such as medical and dental coverage, to
11
select as desired based on their
12 particular needs.
13 Colia Dec, II 8.
13. To help pay for the cost of medical and 13. Disputed, the Flex Dollars paid for
14 dental coverage and pursuant to the medical and dental coverage were not received
Plan, Participants received "Flex by Participates but were paid to a third party for
15 Dollars." the elected benefits only and were tax free.
16 Colia Dec.,119; Rodes Dec.ljS. (Colia Decl. para 4)("HNI treated HNCA as a
17 third party for purposes of administering the
Plan, and vice versa. Pursuant to the terms of the
18 Plan, HNCA paid the actual costs ofbenefits
under the Plan for its elegible
19 employees...pursuant to a funded arrangement
between HNI and HNCA, HNCA arranged for
20 these monies to be deposited into an account
21 maintained and controlled by HNI as the Plan's
sponsor. HNCA's contributions were
22 irrevocable - once made to HNI, HNCA was
unable to recapture of divert the fiinds for
23 HNCA's use of benefit").
24 14. The exact amount of "Flex Dollars" to 14. Disputed as determining what the amount
which a Participant was entitled to "generally" was as to all employees requires the
25 varied depending on the medical and additional discovery sought by Plaintiffs
dental plans that he or she chose, the pending motion to compel the wage records of
26 number of dependents covered and the the class members that would allow Plaintiff to
Participant's geographic location, but verify the amounts of Flex Dollars Defendant
27
generally, the amount was less than the claims were provided.
28 total cost of the benefit(s) that a
DEFENDANTS' SEPARATE STATEMENT OF UNDISPUTED FACTS IN SUPPORT OF MSJ/MSA
43866436V.3
1 participant elected See Plaintiffs Motion to Compel Defendant to
respond to Requests for Production.
2 Colia Dec, 19; Rodes Dec, 16-10, Exs. A, B.
3 15. In a vast majority of cases, the 15. Disputed because in order to cooroborate
Participant was required to contribute corroborating what happened in the "vast
4 some amount toward the cost of the majority of cases" requires additional discovery
benefit(s) he or she selected, and the sought by Plaintiffs pending motion to compel
5 portion of the benefit coverage was the wage records of the class members that
deducted from his or her paycheck. would allow Plaintiff to verify the amounts of
6
Flex Dollars Defendant claims were provided.
Colia Dec, 19., See Plaintiffs Motion to Compel Defendant to
7
respond to Requests for Production.
8
16. Eligible employees under the Plan could 16. Undisputed.
9 waive one or more of the available
benefits.
10
11 Colia Dec,1110.
17. Waiver of medical coverage was only 17. Undisputed.
12 permitted where the employee had other
medical coverage, such as through a
13 spouse's plan.
14 Colia Dec, H 10.
18. In the event that a Participant waived 18. Disputed as incomplete.
15
medicaland/or dental coverage, the Plan
16 provided that the Participant would When Plaintiff waived coverage. Plaintiff
receive a portion of the Flex Dollars as received cash in lieu ofbenefits in her paycheck
17 cash in his or her paycheck. coded as "MedFlxWave," which was an entirely
different form of payment than the payments
18 Colia Dec, 111; Rodes Dec, H 7. reflected on her paycheck for accepting medical
benefits coded on her paycheck as "DenFlxElct"
19
as the payments like "DenFlxElct" were tax free
20 and provided irrevocably to the trustee or third
party. The MedFlxWave payments, on the other
21 hand, were subject to tax and paid directly to
Plaintiff.
22
Colia Dec, 111; Rodes Dec, 1 7.
23
19. In each of die Plan years 2013, 2014, 19. Disputed because in order to corroborate
24 2015 and: 2016, the total cash benefits what amounts were paid to all employees in any
provided to Participants vvho waived given year requires additional discovery sought
25 dental and/or medical coverage by Plaintiffs pending motion to compel the
represented a very small percentage of wage records of the class members that would
26 HNCA's contributions provided under allow Plaintiff to verify the amounts of Flex
27 the Plan for the elected dental and/or Dollars Defendant claims were provided.
medical coverage: 1.4% in 2013, 1.3%
28 in 2014; 0.9% in 2015; and 0.9% in Disputed as irrelevant because these facts
DEFENDANTS' SEPARATE STATEMENT OF UNDISPUTED FACTS IN SUPPORT OF MSJ/MSA
43866436V.3
I 2016. relate to whether tax free payments made
irrevolcably to third parties for benefits can be
2 Declaration of Kelly Sarabia("Sarabia Dec"), excluded from the regular rate, which is a
3 1i1|2-5. different issue than Defendant's motion asking
for whether taxed cash in lieu benfits can be
4 excluded from the regular rate.
5 20. Throughout Plaintiff Spears 20. Undisputed.
6 employment with HNCA, she elected
dental coverage.
7
Rodes Dec.Hll 6, 9, Ex. A.
8 21. Plaintiff Spears waived medical 21. Disputed as incomplete, as Plaintiff
coverage during her employment with Spears received a taxed cash payment of $20 for
9 HNCA, and as a result, received a cash waiving benefits, which is differentfromthe tax-
10 benefit of $20.00 per pay period fi-ee flex dollars provided when employees do
pursuant to the Plan. not waive benefits.
11
Rodes Decim 8-9, Ex. A. Exhibit "J" to the Debbie Calia Declaration filed
12 with Defendant's Motion at HNCA000921
22. During Plaintiff Arana's employment 22. Undisputed.
13
with HNCA, he elected to received both
14 medical and dental coverage and thus
never received any cash benefits in lieu
15 of coverage.
16 Rodes Dec.,1 10, Ex. B.
Issue 2: Plaintiffs' Failure to Pay Overtime Wages claim premised on HNCA's alleged failure to
17 include bonus payments in the regular rate of pay fails because bonus payments were properly
18 accounted for in the regular rate calculation.
19 §D
Preview
1 TIMOTHY J. LONG (STATE BAR NO. 137591) tjlong@orrick.com 2 NICHOLAS J. HORTON (STATE BAR NO. 289417) nhorton@orrick.com 3 ORRICK, HERRINGTON & SUTCLIFFE LLP 400 Capitol Mall, Suite 3000 iO'mr Y OF s' 7^- '^OR^VA 4 Sacramento, CA 95814-4497 Telephone: +1 916 447 8299 5 Facsimile: +1 916 329 4900 6 ANNIE H. CHEN (STATE BAR NO. 292032) annie.chen@orrick.com 7 ORRICK, HERRINGTON & SUTCLIFFE LLP 777 South Figueroa Street, Suite 3200 8 Los Angeles, CA 90017-5855 Telephone: +1-213-629-2020 9 Facsimile: +1-213-612-2499 10 Attorneys for Defendant HEALTH NET OF CALIFORNIA, INC. 11 12 SUPERIOR COURT OF THE STATE OF CALIFORNIA 13 COUNTY OF SACRAMENTO 14 ANDREA SPEARS, an individual, on behalf Consolidated Case No. 34-2017-00210560- of herself and on behalf of all persons similarly CU-OE-GDS 15 situated. Plaintiff, DEFENDANT HEALTH NET OF 16 CALIFORNIA, INC.'S COMPENDIUM OF EVIDENCE IN SUPPORT OF ITS 17 AMENDED REPLY TO ITS MOTION HEALTH NET OF CALIFORNIA, INC., a FOR SUMMARY ADJUDICATION 18 California Corporafion; and Does 1 through 50, inclusive, Date: September 27, 2018 19 Time: 9:00 a.m. Defendants. Dept.: 54 20 Complaint Filed: April 5, 2017 -J 21 TOMAS R. ARANA, on behalf of himself, all FAC Filed: June 29, 2017 < others similarly situated. Complaint Filed: August 1, 2017 22 Plaintiff, CD 23 GC Consolidated Complaint Filed: Dec. 21, 2017 O 24 HEALTH OF CALIFORNIA, INC., a a 25 26 California corporation; and DOES 1-50, inclusive. Defendant. .27 28 DEFENDANT OF HEALTH NET OF CALIFORNIA, INC.'S COMPENDIUM OF EVIDENCE IN SUPPORT OF ITS AMENDED REPLY TO ITS MOTION FOR SUMMARY ADJUDICATION 1 Pursuant to California Rule of Court 3.1350(g), Defendant Health Net of California, Inc. 2 ("HNCA") submits the following evidence in support of its Amended Reply to its Motion for 3 Summary Adjudication: 4 Evidence Tab 5 Declarafion of Timothy J. Long in Support of Defendant HNCA's Amended Reply to Its Motion for Summary Adjudication. 1 Exhibit A - Copy of Plainfiffs Original Responsive Separate Statement of 7 Disputed Material Facts and Addifional Facts in Opposifion to HNCA's Mofion for Summary Adjudication 8 " Exhibit B - Copy of the Court's May 30, 2018 Minute Order 9 Exhibit C - Copy of Plainfiff Spears' Notice of Deposifion of HNCA's IQ Person Most Knowledgeable 11 Declarafion of Diane C. Rodes in Support of Defendant HNCA's Amended Reply to Its Motion for Summary Adjudicafion. 12 Exhibit A - Copy of an exemplar Wellness Incentive Program policy in 13 effect during the class period 14 15 16 Dated: September 14,2018 ORRICK, HERRINGTON & SUTCLIFF^LP 17 18 TIMOTHY/r. LONG 19 Attorneys fon Defendant HEALTH NET OF CALIEQRNfA, INC. 20 " 21 22 23 24 25 26 27 2« -1- DEFENDANT OF HEALTH NET OF CALIFORNIA, INC.'S COMPENDIUM OF EVIDENCE IN SUPPORT OF iTS AMENDED REPLY TO ITS MOTION FOR SUMMARY ADJUDICATION TAB 1 1 TIMOTHY J. LONG (STATE BAR NO. 137591) tjlong@orrick.com 2 NICHOLAS J. HORTON (STATE BAR NO. 289417) nhorton@orrick.com 3 ORRICK, HERRINGTON &, SUTCLIFFE LLP 4.00 Capitol Mall, Suite 3000 4 Sacramento, CA 95814-4497 Telephone: +1 916 447 8299 5 Facsimile: +1 916 329 4900 6 ANNIE H. CHEN (STATE BAR NO. 292032) annie.chen@orrick.com 7 ORRICK, HERRINGTON & SUTCLIFFE LLP 777 South Figueroa Street, Suite 3200 8 Los Angeles, CA 90017-5855 Telephone: +1-213-629-2020 9 Facsimile: +1-213-612-2499 10 Attorneys for Defendant HEALTH NET OF CALIFORNIA, INC. 11 SUPERIOR COURT OF THE STATE OF CALIFORNIA 12 COUNTY OF SACRAMENTO 13 ANDREA SPEARS, an individual, on behalf ConsoHdated Case No. 34-2017-00210560- of herself and on behalf of all persons CU-OE-GDS 14 similarly situated, Plainfiff, DECLARATION OF TIMOTHY J. 15 LONG IN SUPPORT OF DEFENDANT HEALTH NET OF CALIFORNIA, INC'S 16 AMENDED REPLY TO ITS MOTION HEALTH NET OF CALIFORNIA, INC., a FOR SUMMARY ADJUDICATION 17 California Corporation; and Does 1 through Date: September 27, 2018 50, inclusive. Time: 9:00 a.m. 18 Dept: 54 Defendants. 19 Complaint Filed: April 5, 2017 20 FAC Filed: June 29,2017 Complaint Filed: August 1,2017 TOMAS R. ARANA, on behalf of himself, all 21 others similarly situated, Consolidated Complaint Filed: Dec. 21,2017 22 Plainfiff, 23 V. 24 HEALTH NET OF CALIFORNIA, INC., a California corporation; and DOES 1-50, 25 inclusive, 26 Defendant. 27 28 DECLARATION OF TIMOTHY J. LONG ISO DEFENDANT HEALTH NET OF CALIFORNIA, INC.'S AMENDED REPLY TO ITS MOTION FOR SUMMARY ADJUDICATION 1 I , Timothy J. Long, hereby declare as follows: 2 1. I am an attorney duly admitted to pracfice before the courts of the State of California 3 and a partner in the law firm of Orrick, Herrington & Sutcliffe LLP, attorneys of record for 4 Defendant Health Net of California, Inc. ("HNCA"). I make this declarafion on personal 5 knowledge and, if sworn as a witness, could competently testify to the following facts except where 6 otherwise indicated. 7 2. On February 5,2018, HNCA filed its Motion for Summary Adjudicafion 8 ("MSA"). 9 3. On April 11, 2018, Plaintiff Spears opposed the MSA. In her original opposifion 10 papers, Plainfiff Spears conceded 16 of the 22 of HNCA's Undisputed Facts ("UFs") relating to 11 HNCA's Health and Welfare Plan ("the Plan"). Attached hereto as Exhibit A is a true and correct 12 copy of Plaintiff Spears' original Responsive Separate Statement of Disputed Material Facts and 13 Addifional Facts in opposition to HNCA's MSA. In her original opposifion papers. Plaintiff 14 Spears also requested that the hearing on the MSA be confinued pursuant to Code of Civil 15 Procedure 437c, subdivision (h). Plaintiff Spears claimed that the confinuance was necessary 16 because HNCA had not provided discovery that she claimed was required for the Opposifion, 17 specifically to dispute HNCA's UF Nos. 14, 15, and 19. Plaintiff Spears requested a confinuance 18 to allow her then-pending mofion to compel responses to Request for Production 20-21 ("RFPs 19 20-21") relafing to time and payroll records to be ruled upon first. 20 ~ 4. HNCA filed its Reply in support of its MSA on April 20, 2018. 21 5. On May 30, 2018, the Court granted a limited discovery-related continuance on 22 HNCA's MSA based on Plaintiff Spears' claim that she needed payroll records that were 23 "essenfial" to opposing specific UFs No. 14,15, and 19. Attached hereto as Exhibit B is a true 24 and correct copy of the Court's May 30, 2018 Minute Order. 25 6. The parties met and conferred and HNCA agreed to and did produce the discovery 26 Plaintiff Spears sought through RFPs 20-21. HNCA produced electronic time and payroll records 27 on July 6, 2018. 28 DECLARATION OF TIMOTHY J. LONG ISO DEFENDANT HEALTH NET OF CALIFORNIA, INC.'S AMENDED REPLY TO ITS MOTION FOR SUMMARY ADJUDICATION 1 7. On April 3, 2018, Plainfiff Spears noficed the deposition of HNCA's Person Most 2 Knowledgeable ("PMK"). Plaintiff Spears' Nofice of Deposifion of HNCA's PMK requested a 3 P M K relating to the topic of "[HNCA's] policies v/ith respect to providing cash payments in lieu 4 of health benefits to the Plainfiffs." (Emphasis added.) HNCA designated Diane Rodes, Director 5 of Human Resources for Health Net, Inc., who is familiar with the human resources funcfion of 6 HNCA as well as its policies, as the PMK for this category, and she was deposed on May 2, 2018. 7 Plainfiffs did not seek to depose a PMK who could tesfify as to the mechanics of the health and 8 welfare plan HNCA had adopted for the benefit of its employees, and Ms. Rodes was not 9 designated as the PMK regarding the mechanics of the Plan and how the Plan worked. Attached 10 hereto as Exhibit C is a true and correct copy of Plainfiff Spears' Nofice of Deposifion of 11 HNCA's PMK. 12 13 I declare under the penalty of perjury under the laws of the State of California and that the 14 foregoing is true and correct. Executed this 14th day of September, 2018. 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DECLARATION OF TIMOTHY J. LONG ISO DEFENDANT HEALTH NET OF CALIFORNIA, INC.'S AMENDED REPLY TO ITS MOTION FOR SUMMARY ADJUDICATION EXHIBIT A FILED 1 BLUMENTHAL NORDRJSHAUG BHOWMIK DE BLOUW LLP ENDORSED Norman Blumenthal (SBN 068687) 2013 APR 11 PH 1:1,0 2 Kyle R. Nordrehaug (SBN 205975) Aparajit Bhowmik (SEN 248066) 3 Piya Mukherjee (SBN 274217) Jeffrey S. Herman (SBN 280058) 4 2255 Calle Clara U Jolla, California 92037 5 Telephone: (858) 551-1223 Facsimile: (858)551-1232 6 Attorneys for Plaintiff 7 8 9 SUPERIOR COURT OF THE STATE OF CALIFORNIA 10 COUNTY OF SACRAMENTO 11 12 ANDREA SPEARS, an individual, on behalf of Case No. 34-2017-00210560-CU-OE-GDS 13 herself and on behalf of all persons similarly situated, CLASS ACTION 14 Plaintiff, PLAINTIFFS RESPONSIVE SEPARATE 15 vs. STATEMENT OF DISPUTED MATERIAL FACTS AND ADDITIONAL FACTS IN 16 HEALTH NET OF CALIFORNIA, INC., a California OPPOSITION TO DEFENDANT'S MOTION Corporation; and Does 1 through 50, Inclusive, FOR SUMMARY JUDGMENT OR, IN THE 17 ALTERNATIVE, SUMMARY Defendants. ADJUDICATION 18 Reservation No. 2313007 19 TOMAS R. ARANA, on behalf of himself, all others Hearing Date: April 26, 2018 20 similarly situated, Hearing Time: 9:00 a.m. 21 Plaintiff, Judge: Hon. Steven H. Rodda Dept.: 54 22 vs. Action Filed: April 5, 2017 23 HEALTH NET OF CALIFORNIA, INC., a California corporation; and DOES 1 through 50, inclusive. 24 25 Defendants. 26 27 28 PLAINTIFF'S RESPONSIVE SEPARATE STATEMENT OF DISPUTED MATERIAL FACTS AND ADDITIONAL FACTS IN OPPOSITION TO DEFENDANT'S MOTION FOR SUMMARY JUDGMENT OR, IN THE ALTERNATIVE. SUMMARY ADJUDICATION 43g66436v.3 1 Pursuant to Code of Civil Procedure Section 437c(b) and California Rule of Court 3.1350(d), Plaintiff 2 herebys submit her Responsive Separate Statement Of Dispute Material Facts In Opposition to Defendant's 3 Motion For Summary Judgment or, Alternatively, Summary Adjudication. 4 I. THIRD CAUSE OF ACTION FOR FAILURE TO PAY HOURLY WAGES AND FAILURE 5 TO PAY OVERTIME WAGES 6 Issue 1: PlaintifTs' Failure to Pay Overtime Wages claim premised on HNCA's alleged failure to include cash benefits received in lieu of medical payment in Plaintiff Spears' regular rate of pay falls 7 because cash benefits were properly excluded from her regular rate calculation under the Benefit-Plan ContributionsException. 8 9 Pefendiuit||U^^ 'E^iiitifl^^1i^p8nse&^ 'Mymice'.M:!^'^^^{:.:^^^: fci\^f ^ ••••••.r•.•-i' -.'^'-^- •• ' r'\''fr.'-. • "- ••i-iib' ,^••-••.'-^^r^: .•..;;T./-,, • ,r..:: .-.ii.-.r..-' .'. :. -'^:'<•i^>'.^^v-.i4"-- ^-.Xa^.ir:::s 10 1. Plaintiff Spears served as a non-exempt 1. Undisputed. HNCA customer service representative 11 from September 2014 to October 2016 in Rancho Cordova. 12 13 Declaration of Diane C. Rodes (hereinafter "Rodes Dec") 113. 14 2. Plaintiff Arana began working out of the 2. Undisputed. Rancho Cordova call center in 2008 and 15 continues to work there now. He started as a non-exempt customer service 16 representative for HNCA unril his 17 promotion on or about November 14, 2015 to Contact Center Analyst, an 18 exempt position. Since June 2017, Plaintiff Artana has been working as a 19 Call Center Systems Analyst I, also an exempt p>osition. 20 21 Rodes Dec. H 3 3. Between January 1, 2001 and December 3. 22 31,2016, HNI sponsored a cafeteria plan - a written health and welfare plan- 23 called the "Health Net, Inc. Associates Benefit Program" (the "Plan"), which 24 HNCA adopted for the benefit of its 25 employees. 26 Declaration of Debbie Colia ("Colia Dec"), ^ 2, Exhs. A-I. 27 28 DEFENDANTS' SEPARATE STATEMENT OF UNDISPUTED FACTS IN SUPPORT OF MSJ/MSA 43866436V.3 I 4. The Plan was governed by Section 125 4. Undisputed. of the Internal Revenue Code, was 2 subject to the Employee Retirement 3 Income Security Act, and was overseen by a Benefits Committee. 4 Colia Dec, 113. 5 5. As called for in the Plan, the Benefits 5. Undisputed. Committee had fiduciary duties and 6 responsibilities to ensure that HNCA's 7 employer contributions to the Plan were tracked, kept in a separate account, and 8 used only for proper Plan purpose related to the health and welfare benefits 9 ofHNCA employees, including Plaintiffs and their dependents. 10 Colia Dec, 114. 11 6, HNI nreated HNCA as a third party for 6. Undisputed. 12 purposes of administering the plan and vice versa 13 Colia Dec, H 4. 14 7. Pursuant to the terms of the Plan, HNCA 7. Undisputed. paid the actual costs of benefits under the 15 plan for its eligible employees who 16 elected to participate ("Participants"), including Plaintiffs, and their dependents. 17 Colia Dec, 14. 18 8. Pursuant to a funded arrangement 8. Undisputed. between HNI and HNCA, HNCA 19 arranged for the monies used to pay the 20 actual costs ofbenefits to be deposited into an account maintained and 21 controlled by HNI as the Plan's sponsor. 22 Colia Dec, 114. 9. The contributions made by HNCA 9. Undisputed. 23 pursuant to the Plan were irrevocable - once the contributions were made to 24 HNI, HNCA was unable to recapture or 25 divert the funds for HNCA's use or benefit. 26 Colia Dec, H 4. 27 10. The benefits available under the Plan, 10. Undisputed. including the various coverage options 28 and co-payments a Participant was DEFENDANTS' SEPARATE STATEMENT OF UNDISPUTED FACTS IN SUPPORT OF MSJ/MSA '438G6436V.3 i responsible for with respect to the Plan's various covered services and supplies, 2 were explained in detail to HNCA 3 employees in Summary Plan Descriptions (the "Plan SPD") and 4 Evidence of Coverage ("EOC") documents. 5 Colia Dec, HU 5-6, Exs. K-L 6 11. The Plan provided "core" benefit to 11. Undisputed. 7 Participants such as basic life and basic AD&D insurance at no cost to the 8 Participants. 9 Colia Dec,11115-7, Exs. K-L. 12. It also provided "optional" benefits to 12. Undisputed. 10 Participants and/or their dependents, such as medical and dental coverage, to 11 select as desired based on their 12 particular needs. 13 Colia Dec, II 8. 13. To help pay for the cost of medical and 13. Disputed, the Flex Dollars paid for 14 dental coverage and pursuant to the medical and dental coverage were not received Plan, Participants received "Flex by Participates but were paid to a third party for 15 Dollars." the elected benefits only and were tax free. 16 Colia Dec.,119; Rodes Dec.ljS. (Colia Decl. para 4)("HNI treated HNCA as a 17 third party for purposes of administering the Plan, and vice versa. Pursuant to the terms of the 18 Plan, HNCA paid the actual costs ofbenefits under the Plan for its elegible 19 employees...pursuant to a funded arrangement between HNI and HNCA, HNCA arranged for 20 these monies to be deposited into an account 21 maintained and controlled by HNI as the Plan's sponsor. HNCA's contributions were 22 irrevocable - once made to HNI, HNCA was unable to recapture of divert the fiinds for 23 HNCA's use of benefit"). 24 14. The exact amount of "Flex Dollars" to 14. Disputed as determining what the amount which a Participant was entitled to "generally" was as to all employees requires the 25 varied depending on the medical and additional discovery sought by Plaintiffs dental plans that he or she chose, the pending motion to compel the wage records of 26 number of dependents covered and the the class members that would allow Plaintiff to Participant's geographic location, but verify the amounts of Flex Dollars Defendant 27 generally, the amount was less than the claims were provided. 28 total cost of the benefit(s) that a DEFENDANTS' SEPARATE STATEMENT OF UNDISPUTED FACTS IN SUPPORT OF MSJ/MSA 43866436V.3 1 participant elected See Plaintiffs Motion to Compel Defendant to respond to Requests for Production. 2 Colia Dec, 19; Rodes Dec, 16-10, Exs. A, B. 3 15. In a vast majority of cases, the 15. Disputed because in order to cooroborate Participant was required to contribute corroborating what happened in the "vast 4 some amount toward the cost of the majority of cases" requires additional discovery benefit(s) he or she selected, and the sought by Plaintiffs pending motion to compel 5 portion of the benefit coverage was the wage records of the class members that deducted from his or her paycheck. would allow Plaintiff to verify the amounts of 6 Flex Dollars Defendant claims were provided. Colia Dec, 19., See Plaintiffs Motion to Compel Defendant to 7 respond to Requests for Production. 8 16. Eligible employees under the Plan could 16. Undisputed. 9 waive one or more of the available benefits. 10 11 Colia Dec,1110. 17. Waiver of medical coverage was only 17. Undisputed. 12 permitted where the employee had other medical coverage, such as through a 13 spouse's plan. 14 Colia Dec, H 10. 18. In the event that a Participant waived 18. Disputed as incomplete. 15 medicaland/or dental coverage, the Plan 16 provided that the Participant would When Plaintiff waived coverage. Plaintiff receive a portion of the Flex Dollars as received cash in lieu ofbenefits in her paycheck 17 cash in his or her paycheck. coded as "MedFlxWave," which was an entirely different form of payment than the payments 18 Colia Dec, 111; Rodes Dec, H 7. reflected on her paycheck for accepting medical benefits coded on her paycheck as "DenFlxElct" 19 as the payments like "DenFlxElct" were tax free 20 and provided irrevocably to the trustee or third party. The MedFlxWave payments, on the other 21 hand, were subject to tax and paid directly to Plaintiff. 22 Colia Dec, 111; Rodes Dec, 1 7. 23 19. In each of die Plan years 2013, 2014, 19. Disputed because in order to corroborate 24 2015 and: 2016, the total cash benefits what amounts were paid to all employees in any provided to Participants vvho waived given year requires additional discovery sought 25 dental and/or medical coverage by Plaintiffs pending motion to compel the represented a very small percentage of wage records of the class members that would 26 HNCA's contributions provided under allow Plaintiff to verify the amounts of Flex 27 the Plan for the elected dental and/or Dollars Defendant claims were provided. medical coverage: 1.4% in 2013, 1.3% 28 in 2014; 0.9% in 2015; and 0.9% in Disputed as irrelevant because these facts DEFENDANTS' SEPARATE STATEMENT OF UNDISPUTED FACTS IN SUPPORT OF MSJ/MSA 43866436V.3 I 2016. relate to whether tax free payments made irrevolcably to third parties for benefits can be 2 Declaration of Kelly Sarabia("Sarabia Dec"), excluded from the regular rate, which is a 3 1i1|2-5. different issue than Defendant's motion asking for whether taxed cash in lieu benfits can be 4 excluded from the regular rate. 5 20. Throughout Plaintiff Spears 20. Undisputed. 6 employment with HNCA, she elected dental coverage. 7 Rodes Dec.Hll 6, 9, Ex. A. 8 21. Plaintiff Spears waived medical 21. Disputed as incomplete, as Plaintiff coverage during her employment with Spears received a taxed cash payment of $20 for 9 HNCA, and as a result, received a cash waiving benefits, which is differentfromthe tax- 10 benefit of $20.00 per pay period fi-ee flex dollars provided when employees do pursuant to the Plan. not waive benefits. 11 Rodes Decim 8-9, Ex. A. Exhibit "J" to the Debbie Calia Declaration filed 12 with Defendant's Motion at HNCA000921 22. During Plaintiff Arana's employment 22. Undisputed. 13 with HNCA, he elected to received both 14 medical and dental coverage and thus never received any cash benefits in lieu 15 of coverage. 16 Rodes Dec.,1 10, Ex. B. Issue 2: Plaintiffs' Failure to Pay Overtime Wages claim premised on HNCA's alleged failure to 17 include bonus payments in the regular rate of pay fails because bonus payments were properly 18 accounted for in the regular rate calculation. 19 §D