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1 BLUMENTHAL NORDREHAUG BHOWMIK DE BLOUW LLP
Norman B. Blumenthal (State Bar #068687)
2 Kyle R. Nordrehaug (State Bar #205975)
Aparajit Bhowmik (State Bar #248066)
3 Piya Mukherjee (State Bar #274217) FILEQ^ENDORSED
2255 Calle Clara
4 La Jolla, CA 92037
Telephone: (858)551-1223 DEC - 7 2018
5 Facsimile: (858)551-1232
6 Attomeys for Plaintiff Andrea Spears By D. Lashley, Deputy Clerk
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SUPERIOR COURT OF THE STATE OF CALIFORNIA
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IN AND FOR THE COUNTY OF SACRAMENTO
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11 ANDREA SPEARS, an individual, on behalf Case No. 34-2017-00210S60-CU-OE-GDS
of herself and on behalf of all persons
12 similarly situated. CLASS ACTION
Plaintiff,
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DECLARATION OF PIYA
MUKHERJEE IN SUPPORT OF
14 HEALTH NET OF CALIFORNIA, INC., a PLAINTIFFS' MOTION TO CONTINUE
Califomia Corporation; and Does 1 through HEARING DATE AND BRIEFING
15 50, inclusive. SCHEDULE RELATING TO CLASS
Defendants. CERTIFICATION
16
TOMAS R. ARANA, on behalf of himself, Hearing Date: 4©© (2^/'*^^ ^
17 all others similarly situated. Hearing Time: TBD '2^;0<^ p / V V
18 Plaintiff,
V. Judge: Hon. Alan G. Perkins
19 Dept.: 35
HEALTH NET OF CALIFORNIA, INC., a
Califomia corporation; and DOES 1-50, Action Filed: April 5, 2017
20 inclusive,
21 Defendant.
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DECLARATION OF PIYA MUKHERJEE
CASE No. 34-2017-00210560-CU-OE-GDS
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1 DECLARATION OF PIYA MUKHERJEE
2 I, Piya Mukherjee, declare as follows:
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4 1. I am one of attomeys of record for the Plaintiff in the above entitled action, and have
5 personal knowledge of each of the facts set forth herein, and if called upon as a witness could testify
6 competently thereto, except as to the matters stated on information and belief, and as to such matters 1
7 believe them to be true.
8 2. This declaration is being submitted in support of Plaintiffs' Motion to Continue Hearing
9 Date and Briefing Schedule Relating to Class Certification.
10 3. Plaintiff Spears's action was consolidated with Plaintiff Arana's action on October 11,
11 2017. The plaintiffs have served multiple sets of discovery and have taken the deposition of Defendant's
12 Person Most Knowledgeable for a portion of the classifications in Plaintiff Spears's Notice of Deposition
13 of Defendant. The Plaintiffs have met and conferred extensively with Defendant regarding discovery
14 and the Parties have engaged in substantial motion practice.
15 4. The initial briefing schedule regarding the motions related to class certification were
16 continued by the Parties by stipulation in order to prevent requiring the Parties to file motions for class
17 certification one (1) day after the hearing on Defendant's initial motion for summary adjudication.
18 Plaintiffs initially filed a motion to continue the hearing date and briefing schedule. Plaintiffs' motion
19 was eventually taken off calendar because Defendant agreed to stipulate to Plaintiffs' requested
20 continuance so that Plaintiffs' motion for class certification could adequately address the Court's mling
21 on the motion for summary adjudication. The current briefing schedule was set as follows: The motion
22 for class certification and motion for decertification filing deadline: December 14,2018; Any opposition
23 to the opening class certification related motions: February 15, 2019; Any reply in response: March 15,
24 2019; and Hearing as to the motions related to class certification: April 11, 2019 at 10:00 a.m.
25 5. On October 23,2018, Judge Kmeger in Department 54 issued a mling granting in part
26 and denying in part Defendant's initial motion for summary adjudication. A tme and correct copy of
27 Judge Kmeger's Order is attached hereto as Exhibit 1.
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DECLARATION OF PIYA MUKHERJEE
CASE No. 34-2017-00210560-CU-OE-GDS
1 6. On October 26,2018, Defendant filed and served a case management conference
2 statement which included a section regarding "dispositive motions." Therein, while Defendant states that
3 it is considering whether to appeal the mling on the motion for summary adjudication, Defendant fails to
4 state that it is considering filing a renewed motion for summary adjudication. A tme and correct copy of
5 Defendant's case management conference statement is attached hereto as Exhibit 2.
6 7. The Parties appeared before this Court on November 9, 2018 for a case management
7 conference where Defendant, again, did not notify this Court or Plaintiffs that it had any intention of
8 filing a renewed motion for summary adjudication.
9 8. On November 19, 2018, without providing any prior notice, Defendant filed the renewed
10 motion for summary adjudication.
11 9. On November 27,2018, four (4) business days after Defendant served the renewed
12 motion for summary adjudication, 1 provided counsel for Defendant a draft stipulation to continue the
13 hearing date and briefing schedule on the motion for class certification such that the scope of the claims
14 and the proposed class are consistent with the order on the Renewed MSA, scheduled to be heard on
15 Febmary 4, 2018. On November 28, 2018, counsel for Defendant responded to my email and stated that
16 Defendant would not agree to continue the briefing schedule on the motion for class certification
17 necessitating the filing of this motion. A tme and correct copy of this email exchange is attached hereto
18 as Exhibit 3.
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20 I declare under penalty of perjury under the laws of the State of Califomia that the
21 foregoing is tme and correct. Executed this 5th day of December, 2018, at La Jolla, Califomia.
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DECLARATION OF PIYA MUKHERJEE
CASE No. 34-2017-00210560-CU-OE-GDS
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DECLARATION OF PIYA MUKHERJEE
CASE No. 34-2017-00210560-CU-OE-GDS
Cherllyn LannI vs. Ca Montessorl Project
Nature of Proceeding: Motion to Compel Compliance with Prior Discovery Order
Filed By: Ullrich, Gabriel
On the Court's own motion, this matter Is continued to October 1. 2018 at 9:00 a.m. in
this department. If the new date is inconvenient, then counsel shall meet and confer
and, no later than 4:00PM today, inform the Department 54 Clerk of their request for a
subsequent date.
Item 4 2016-00196794-CU-PA
John William Dunkle vs. Lisa Jane Bottjen
Nature of Proceeding: Motion to Compel Request for Admissions and Form Interrogatories
Filed By: Campora, Steven M.
This matter is dropped. A notice of settlement was filed on 9/21/2018.
Item 5 2017-00210560-CU-OE
Andrea Spears vs. Health Net of California, Inc.
Nature of Proceeding: Motion for Summary Adjudication
Filed By: Lee, Stephanie Gail
Defendant Health Net of California, Inc.'s ("HNCA") Motion for Summary Adjudication
as against the Third and Seventh Causes of Action in the Consolidated Complaint of
Plaintiffs Andrea Spears and Tomas R. Arana (collectively, "Plaintiffs") Is DENIED IN
PART AND GRANTED IN PART as described below.
Allegations in Pleading
This is a consolidated wage-and-hour putative class action. Andrea Spears ("Spears")
and Tomas R. Arana ("Arana") (collectively "Plaintiffs") are the named plaintiffs.
Defendant Health Net of California, Inc. ("HNCA" or "Defendant") is the moving party
seeking summary adjudication here.
Plaintiffs allegedly served as hourly, non-exempt employees in HNCA call centers.
Arana allegedly was promoted to a salaried, exempt position in or about November
2015. He alleges HNCA misclassified him as exempt.
In the consolidated Complaint, Plaintiffs allege that Defendants failed to pay them and
all other similarly situated individuals for all hours worked and failed to pay overtime
wages at the correct rate, among other things. (Complaint at 1 (Register of Actions
("RCA") 66).) There is also a PAGA claim for civil penalties.
Central to the instant motion are Plaintiffs' overtime claims, which are premised
on HNCA's alleged failure to include "cash benefits" or "cash in lieu of benefits"
when calculating the "regular rate" for overtime. It is undisputed that HNCA
employees who waived medical benefits received such "cash" in their
paychecks.
Plaintiff argue that such "cash" payments should have been included when
calculating overtime rates. Defendant argues that such payments were properly
excluded when calculating overtime rates because, as a matter of law and on
undisputed facts, such payments are subject to a statutory exclusion codified at
29 U.S.C. § 207(e)(4), also known as the Benefit-Plan Contributions Exception.
Reguest to Strike Plaintiffs' Amended Opposition
This motion was originally set to be heard on May 30, 2018, but the Court continued
the motion to today's date to allow Plaintiff additional requested discovery of payroll
records, and to allow amended opposition and reply briefing. In that Order of May 30,
2018, the Court found "that Plaintiff has made a sufficient showing under section 437c,
subdivision (h), to justify the exercise of discretion and grant ofthe requested
continuance."
Defendant now requests that Plaintiffs' Amended Opposition papers be stricken
because they do not "argue why the payroll records they sought created a triable issue
of fact" and also because they contradict portions ofthe original Opposition papers.
(Def.'s Amended Reply at 3.)
Defendants request is OVERRULED. The Court's prior Order granted the
continuance for the additional discovery and called for the filing of an Amended
Opposition, but the Court's Order did not expressly limit the scope ofthe Amended
Opposition in any way, and Defendant did not request any such limitation. As a result,
the Amended Opposition does not violate the Court's Order of May 30, 2018.
Accordingly, in ruling on this motion, the Court considers the original moving papers,
the Amended Opposition papers, and the Amended Reply papers.
Evidentiary Objections
No separate written objections to evidence were filed.
The Court notes that Defendant filed an Amended Reply Separate Statement of
Undisputed Material Facts, to which Plaintiffs' Opposition papers raised an anticipatory
objection. The Court considered the legal arguments made in Defendants' Amended
Reply Separate Statement with respect to the UFs specifically discussed below herein.
The Court also notes that Defendant filed new evidence with its Reply, i.e., evidence
regarding "wellness payments." However, the Court did not find it necessary to reach
the new evidence in ruling on the instant Motion.
Legal Standard
A defendant moving for summary judgment or summary adjudication may demonstrate
that the plaintifTs cause of action has no merit by showing that (1) one or more
elements of the cause of action cannot be established, or (2) there is a complete
defense to that cause of action. (Code Civ. Proc. § 437c(f)(2), (p)(2); Aguilar v. Atlantic
Richfield Co. (2001) 25 Cal.4th 826, 843, 849.) This showing must be supported by
evidence, such as affidavits, declarations, admissions, interrogatory answers,
depositions, and matters of which judicial notice may be taken. (Code Civ. Proc. §
437c(p)(2); Aguilar, 25 Cal.4th at 850, 855.)
A defendant moving for summary judgment or summary adjudication bears the burden
of showing that the causes of action have no merit or that there are one or more
complete defenses to them. (Code Civ. Proc. § 437c(p)(2).) A judge must grant a
motion for summary judgment if all the papers submitted show that there is no triable
issue as to any material fact and that the moving party is entitled to judgment as a
matter of law. (Id. § 437c(c); Mann v. Cracchiolo (1985) 38 Cal.3d 18, 35.) Summary
judgment is properly granted only if the moving party's evidence establishes that there
is no issue of material fact to be tried. (Lipson v. Superior Court (1982) 31 Cal.3d 362,
374.) Once the moving party meets this burden of production, the burden shifts to the
opposing party to produce admissible evidence demonstrating the existence of a
triable issue of material fact. (Aguilar v. Atlantic Richfield Co. (2001) 25 Cal.4th 826,
849.) A judge may not grant summary judgment when any material factual issue is
disputed. (O'Riordan v. Federal Kemper Life Assur. (2005) 36 Cal.4th 281, 289.)
The issues raised by a motion for summary adjudication or summary judgment are
framed by the pleadings. (Dromy v. Lukovsky (20^3) 219 Cal.App.4th 278, 282;
Lennar Northeast Partners v. Buice (1996) 49 Cal.App.4th 1576, 1582.)
Discussion
Third Cause of Action for Failure to Pay Hourly Wages and Failure to Pay
Overtime Wages
Issue 1: Plaintiffs' 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 fails because cash benefits were properly
excluded from her regular rate under the Benefit-Plan Contributions Exception.
California follows the Fair Labor Standards Act ("FLSA"), which excludes from the
regular rate for purposes of overtime compensation the "cash" employees receive
when they waive medical coverage under what is known as the Benefit-Plan
Contributions Exception. (See 29 U.S.C. § 207(e)(4) ("Section 207(e)(4)"); see also 29
C.F.R.§ 778.215(a).)
Section 207(e)(4) provides:
(a) "Regular rate" defined. As used in this section the
"regular rate" at which an employee is employed shall
be deemed to include all remuneration for employment
paid to. or on behalf of. the employee, but shall not be
deemed to include [... ] (4) contributions irrevocably
made by an employer to a trustee or third person
pursuant to a bona fide plan for providing old-age,
retirement, life, accident, or health insurance or similar
benefits for employees.
(29 U.S.C. § 207(e)(4) (emphasis added); see also Huntington Memorial Hospital v.
Superior Court (2005) 131 Cal.App.4th 893, 903-905 (summarizing how the "regular
rate" must be calculated for purposes of determining overtime pay).)
Courts have applied Section 207(e)(4) so as to find that an employer that pays "cash in
lieu of benefits" directly to employees will not, as a matter of law, be able to have
such payments be excluded from the "regular rate." To be excluded from the "regular
rate," the "cash in lieu of benefits" payments must be made to a "trustee or third party"
as employer "contributions" within the plain text of Section 207(e)(4). (See Flores v.
City of San Gabriel (9th Cir. 2016) 824 F.3d 890, 894, 901-03 (because the city paid
cash in lieu of unused benefits directly to employees, such payments had to be
included in regular rate of pay and thus in calculation of overtime rate; payment was
not excluded under 29 U.S.C. § 207(e)(4) because it was paid "directly to employees"
and therefore was not a "contribution by the employer"); see also Local 246 Util.
Workers Union v. Southern Cal Edison Co. (9th Cir. 1995) 83 F.3d 292, 296
(reversing grant of summary judgment to employer because employer failed to show
that "supplemental payments to employees consisted of contributions made by [the
employer] irrevocably to a trust.").)
Although neither party identified any decisions from California courts on this issue,
both parties cite to federal district court and Ninth Circuit case law. In Flores, the Ninth
Circuit explained:
The City also argues that its cash-in-lieu of benefits
payments are properly excluded pursuant to § 207(e)(4).
Section 207(e)(4) excludes from the regular rate of pay
"contributions irrevocably made by an employer to a trustee
or third person pursuant to a bona fide plan for providing
old-age, retirement, life, accident, or health insurance or
similar benefits for employees."
Because the City pays the unused benefits directly to
its employees and not "to a trustee or third person," its
cash-in-lieu of benefits payments cannot be excluded
under § 207(e)(4). We rejected a similar argument in
Local 246 when the employer had proffered no
evidence that any of the payments at Issue were made
to a trust rather than directly to the employees because
"[s]ection 207(e)(4) deals with contributions by the
employer, not payments to the employee." Local 246,
83 F.3d at 296. That reasoning applies equally here.
The City urges us to find that its cash-in-lieu of benefits
payments fall within the ambit of § 207(e)(4) even though
the payments are not made to a trustee or third party
because the payments "generally" meet the requirements
of that subsection, arguing that it should not be penalized
for administering its own flexible benefits plan. But" [wjhere
'[a] statute's language is plain, the sole function ofthe
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 it says
there.'" [Citations.] The City's cash-in-lleu 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" satisfy the requirements of
that provision. This is particularly true here, where
exemptions to the FLSA's requirements are to be narrowly
construed in favor of the employee. [Citations.] We thus
have no trouble concluding that the City's cash-in-lieu of
benefits payments are not properiy excluded from the
regular rate of pay pursuant to § 207(e)(4).
(Flores, 824 F.3d at 901-02 (emphasis added) (citations omitted); see also Local 246,
83 F.3d 292, 296 ("On this record, however, there Is no indication that any of the
supplemental payments to the employees consisted of contributions made by
Edison irrevocably to a trust. Section 207(e)(4) deals with contributions by the
employer, not payments to the employee. If the employer meets the requirements of
section 207(e)(4) in making irrevocable contributions to a trust, then those
contributions will not be added to the regular pay rate on the theory that they are a
form of indirect bonus to the worker.") (emphasis added).)
In ruling on this motion, the Court is bound by Section 207(e)(4)'s plain text stating that
only employer "contributions" to a third party will be excluded from the "regular rate."
The Court herein also applies Flores and Local 246, both of which require an employer
to produce evidence that "cash in lieu of benefits" payments were: (1) in fact
"contributions" to a "trustee or third party," (2) made pursuant to a benefits plan, and
(3) not paid directly to the employee.
Defendant's moving papers argue that the payments of "cash in lieu of benefits" to
employees can be permissibly excluded from the "regular rate" given that HNI, not
HNCA, made those payments to HNCA's employees. Defendant argues that taking
the instant case beyond the scope of Flores, HNCA did not "directly" pay its employees
the "cash" ~ HNI did. Defendant argues that HNI is HNCA's parent company and the
"third party" charged with administering HNCA's employee health and welfare benefit
Plan ("Plan"), as well as the third party payroll administrator for HNCA.) Defendant
essentially argues that, by virtue of HNI's involvement as a go-behween or intermediary
between HNCA and HNCA's employees, HNCA undisputedly did not make those
"cash" payments "directly" to employees, such that Flores is factually distinguishable.
However, Defendant's actual evidence - itemized in its Separate Statement of
Undisputed Facts ("SSUF") - fails to address the actual source ofthe "cash in lieu of
benefits." Instead, the SSUF states generally that HNCA "paid the actual costs of
benefits under the plan" to "eligible employees who elected to participate" in the Plan.
(UF 7 (emphasis added).) Similarly, UF 8 asserts that pursuant to the Plan, "HNCA
arranged for the monies used to pay the actual costs of benefits to be deposited into
an account maintained and controlled by HNI as the Plan's sponsor." (UF 8
(emphasis added).) Both UF 7 and UF 8 give rise to the inference that HNCA
contributed the "actual costs of benefits" to HNI pursuant to the Plan - but there is no
evidence as to what the "actual costs of benefits" actually means. Crucially, there is
no evidence that the "actual costs of benefits" includes the "cash in lieu of benefits" at
the heart of this motion.
In other words, despite the plain text of Section 207(e)(4) requiring an employer to
demonstrate that the amounts it seeks to exclude from the "regular rate" were in fact"
contributions" from the employer to a third party pursuant to a benefits plan, no UF
squarely asserts that HNCA "contributed" the "cash in lieu of benefits" payments to
HNI. While there is evidence that HNCA contributed the "actual costs of benefits" to
HNI, no UFs define the phrase "actual costs of benefits." No UFs demonstrate that
"cash In lieu of benefits" is an "actual cost of benefits."
Defendant has not clearly identified evidence: (1) that it actually "contributed" the "cash
in lieu of benefits" to third party HNI, and (2) that HNI, not HCNA, actually paid out
those amounts to employees. Therefore, the Court must find that Defendant did not
meet its initial burden on this motion.
The Court has examined the evidence specifically identified as support for the various
pertinent UFs, including those stating that HNCA "paid the actual costs of benefits,"
that employees can waive medical benefits, and that employees waiving such benefits
would receive a cash payment in their paycheck. (UFs 7, 8, 9,16,18, 19.) But on
the Court's review, none ofthe cited evidence actually states that HNCA "contributed"
the "cash in lieu of benefits" to HNI, or that all "cash in lieu of benefits" payouts would
have necessarily come from funding that HNCA had "contributed" to HNI for the "actual
costs of benefits" under the Plan.
For instance, declarant Kelly Sarabia, the Payroll Director for HNI during the relevant
period, declares that "HNCA paid out" various amounts under "pay codes" for
"waived" benefits and "paid out" various other amounts under "pay codes" for "elected"
benefits. (Declaration of Kelly Sarabia ("Sarabia Decl.") ^ 1-5 (emphasis added).)
But the declaration is silent as to whether HNCA "contributed" the "cash in lieu of
benefits" funding to HNI pursuant to the Plan in the first place, before "HNCA paid out"
those funds to employees. In fact, the phrasing used in Sarabia's declaration alone,
which refers to HNCA and not HNI as "paying out" these amounts to employees, could
suffice to reveal a material factual dispute as to whether HNI or HNCA actually "paid
out" the funds used to pay the "cash in lieu of benefits." In other words, there must be
no factual dispute that HNI is the "third party" entity (see 29 U.S.C. § 207(e)(4)) that
"paid out" such "cash in lieu of benefits" payments pursuant to the Plan, yet Sarabia
declares that HCNA "paid out" various amounts. (The Court need not and does not
examine Plaintiffs' evidence offered in Opposition for purposes of showing a material
factual dispute on this issue, because Defendant did not meet its initial burden of
showing that HNCA "contributed" to HNI the funds used to pay "cash in lieu of
benefits.")
Declarant Diane C. Rodes, Director of Human Resources for HNI, declares: that
HNCA is a subsidiary of HNI and is familiar with the human resources functions of
HNCA; that Plan participants receive "Flex Dollars" "to help pay for the cost of medical
and dental insurance coverage;" that "Flex Dollars received were reflected in
Participants' paychecks," and that "when a Participant waived medical and/or dental
coverage, HNCA provided a cash benefit pursuant to the terms of the Plan [which was]
reflected as a monetary line item in the 'Earnings' section ofthe Participant's wage
statement." (Declaration of Diane C. Rodes ("Rodes Decl.") 1, 5-8.) But this
testimony is silent as to whether HNCA actually "contributes" the specific "cash in lieu
of benefits payments" to HNI before such cash is ultimately paid to the employees.
This testimony is silent as to whether the "cash in lieu of benefits" is part ofthe "actual
costs of benefits" that HNCA "deposited" (UFs 7-8) into an account controlled by HNI.
Similarly, Declarant Debbie Colia, Vice President of Organizational Effectiveness for
HNI, declares: that "Pursuant to the terms ofthe Plan, HNCA paid the actual costs of
benefits under the Plan for its eligible employees who elected to participate;" that
"HNCA arranged for these monies to be deposited into an account maintained and
controlled by HNI as the Plan's sponsor;" that participants received "'Flex Dollars' to
help pay for the cost of medical and dental coverage;" that the Participant "was
required to contribute some amount [ofthe Flex Dollars] toward the cost ofthe benefit
(s) he or she selected;" that "eligible employees under the Plan could waive one or
more ofthe available benefits;" and that "in the event that a Participant waived medical
and/or dental coverage, the Plan provided that the Participant would receive a portion
ofthe Flex Dollars as cash in his or her paycheck." (Declaration of Debbie Colia
("Colia Decl.") HH 1, 4, 9-11.) But again, this testimony is silent as to whether HNCA
actually "contributes" the "cash in lieu of benefits" to HNI in the first place. The
testimony is also silent as to whether the "cash in lieu of benefits" is in fact part of the
"actual costs of benefits" that HNCA undisputedly "deposited" (UFs 7-8) into an
account controlled by HNI.
The Court notes that Debbie Colia's declaration attaches copies of Plan documents
and various amendments thereto. However, neither Debbie Colia's declaration nor the
SSUF specifically identify any sections ofthe Plan, let alone any sections that might
demonstrate that HNCA would actually "contribute" the "cash in lieu of benefits" to HNI.
This alone warrants denial ofthe instant motion. It is Defendants burden as the
moving party to meaningfully identify supporting evidence in its moving papers. (Cal.
R. Ct. 3.1350(d)(3) (in the Separate Statement, "[c]itation to the evidence in support of
each material fact must include reference to the exhibit, title, page, and line
numbers) (emphasis added).) Moreover, while the Court located a Plan document
(Exh. J to Colia Decl. at HNCA 000921) stating that waived or unused Flex Dollars
would be paid out as "cash in your paycheck," this statement alone does not give rise
to an inference that HNCA "contributed" such "cash" to HNI before the employees
would receive it in the form of "cash in [his or her] paycheck."
As such, the record is bereft as to where the money for the "cash in lieu of benefits"
came from before it was paid to employees, and the evidence is in conflict as to
whether HNI or HNCA actually "paid out" that cash to employees. In order for the
exclusion described in Section 207(e)(4) to apply to the "cash" payments central to the
instant motion, there must be some evidence that these cash payments were
"contributions" from HNCA to HNI (as its trustee or third party) "pursuant to" the
text of the Plan. (See 29 U.S.C. § 207(e)(4) (excluding only "contributions" from
employer to trustee or third party "pursuant to" a plan); Flores, 824 F.3d at 901-02 (in
order to apply exclusion stated at Section 207(e)(4), an employer must have"
evidence that any of the payments at issue were made to a trust [or third party]
rather than directly to the employees" because "[sjection 207(e)(4) deals with
contributions by the employer, not payments to the employee.") (emphasis added);
Local 426, 83 F.3d at 296 (same).) Defendant has not met its burden of identifying
such evidence.
In the Reply papers. Defendant argues that it has presented "uncontroverted
testimony . . . that HNCA made irrevocable payments to HNI as the Plan administrator
(i.e., a "third party" within the meaning ofthe Benefit-Plan contributions Exception) to
cover all benefits paid out by the Plan, Including the cash benefits that are the
subject of this motion. RUFs 3-19." (Reply at 5-6 (emphasis added).)
The Court is not persuaded. Put simply, none of UFs 3-19 squarely address the "cash
benefits that are the subject of this motion." The wording of these UFs matters. The
UFs refer only to the "actual cost of benefits," a phrase Defendant never defines. As a
result, the Court cannot find that "actual cost of benefits" undisputedly includes "cash
in lieu of benefits" or "cash benefits." Therefore, while Defendant framed UFs 3-19 so
as to broadly state that HNCA contributed the "the actual costs of benefits," contrary to
Defendant's assertions in the Reply there is no evidence as to whether the "actual
costs of benefits" includes the "cash benefits" paid in lieu of medical coverage.
Similarly, Defendant argues in Reply that it is "undisputed" that "the cash benefits were
deposited directly into Spears' bank account by HNI, which processed HNCA's payroll
(Sarabia Decl. H 1)." (Reply at 6.) Yet Paragraph 1 ofthe Sarabia Declaration merely
states:
I am the payroll director for Centene Corporation. Before
the merger with Centene Corporation, I was the payroll
director for Health Net, Inc. Between the hwo companies, I
have been employed in this position for approximately 20
years. As Payroll Director, I oversee all aspects of payroll
for Centene Corporation and its subsidiaries, including
Health Net of California, Inc. ("HNCA"). I did the same
thing when I was employed at Health Net Inc.
(Sarabia Decl. U 1.) In the remainder of her declaration, Sarabia also goes on to
declare that "HNCA" "paid out" various amounts for various pay codes for various
years.
Contrary to Defendants argument in Reply (Reply at 6), there is no direct testimony
from Sarabia that "HNI processed HNCA's payroll." Instead, Sarabia declares that she
was payroll director for HNI at one time, and that as current payroll director for
Centene she oversees all aspects of payroll for HNCA, although Sarabia does declare
generally that she "did the same thing" when she was employed at HNI. But contrary
to Defendant's suggestion (Reply at 6) there is no testimony from Sarabia that for
employees who waived coverage, "the cash benefits were deposited directly" into
employee bank accounts "by HNI, which processed HNCA's payroll." Sarabia makes
no mention of "cash benefits" or cash in lieu of benefits, does not discuss where the
money comes from to pay out such cash, does not discuss which entity actually pays
such "cash" to employees who waive coverage, and does not discuss whether the
funds for such "cash" come from "contributions" from HNCA to HNI pursuant to the
Plan as opposed to funds passed from HNCA to HNI for payroll processing purposes.
The Court finds that Sarabia's declaration is simply not evidence that "HNCA made
irrevocable payments to H N I . . . to cover all benefits paid out by the Plan, including
the cash benefits that are the subject of this Motion." (Reply at 5-6 (emphasis
added).)
Also on Reply, Defendant argues that Flores and its progeny are inapplicable to the
instant facts (Reply at 6-7) because "unlike the facts in Flores . . . HNCA did not
administer its own benefits plan; instead HNCA made irrevocable contributions to third
party HNI in its capacity as the Plan sponsor and administrator." (Reply at 7.) Yet
Defendant has not identified any authorities suggesting that when a third party acts as
both an employer's plan administrator ~ bound to act in a fiduciary/trustee capacity -
- and the employer's payroll processor (as Defendant argues HNI did here),
whenever the third party acts in the capacity of a payroll processor it will
nevertheless be considered the sort of "trustee or third party" referenced in Section
207(e)(4).
Defendant has not shown entitlement to judgment as a matter of law on undisputed
facts with respect to Issue 1.
Accordingly, Defendant's Motion for Summary Adjudication is DENIED as to
Issue 1.
Issue 2: Plaintiffs failure to pay overtime wages claim premised on
HNCA's alleged failure to include bonus payments in the regular rate of
pay fails because bonus payments were properly accounted for in the
regular rate calculation.
Plaintiffs allege that Defendant improperiy calculated the "regular rate" of pay so as to
exclude "non-discretionary bonuses." (Complaint HJ 40-41, 91-92.) Plaintiffs allege
that Defendants violated Labor Code §§ 510,1194, and 1198 as a result of not
correctly calculating the regular rate of pay to include all applicable remuneration,
including "non-discretionary bonuses." (Complaint ^ 41.)
In general, bonuses are "[sjums paid in recognition of services performed during
a given period." (29 U.S.C. § 207(e)(3); see also 29 C.F.R. 778.208; 778.211.)
However, there is no blanket rule concerning whether bonuses must be
included in an employee's "regular rate." Rather, that determination depends on
whether a given bonus was "discretionary." Discretionary bonuses ~ i.e.,
bonuses where the employer retains discretion as to both the fact and amount
ofthe payment ~ may be excluded from the regular-rate calculation. (29 C.F.R.
§§ 778.208, 778.211(b).) On the other hand, where a bonus payment is
considered a part ofthe regular rate at which an employee is employed, it must
be included in computing his regular houriy rate of pay and overtime
compensation. 29 C.F.R. § 778.209(a). Where a bonus is "promised" to
employees, the bonus must be included in the regular rate. A bonus, to be
excluded under section 7(e)(3)(a), must not be paid "pursuant to any prior
contract, agreement, or promise." (29 C.F.R. 778.211(c).)
Defendant argues that the undisputed facts show that Plaintiff Spears never received
any "bonus payments." (P&As at 4; UF 23.) Defendant's UF 23 simply states that "[a]t
no time during Plaintiff Spears' employment with HNCA did she receive any bonus
payments," listing the Rodes Declaration at U 11 as the sole supporting evidence. By
using the word "bonus" in the UF, Defendant relies on its own undefined
characterization of the word "bonus." Declarant Rodes likewise does not define what
she personally considers to be a "bonus" payment. Aside from testimony regarding
"SPOT awards," she does not offer evidence as to whether Spears ever received any
non-discretionary, promised amounts potentially causing Spears to expect such
payments regularly. (See e.g., 29 C.F.R. 778.211.)
Even if such evidence were sufficient to shift the burden to Plaintiffs here. Plaintiffs
identify evidence that renders UF 23 disputed. (PL's Resp. to UF 23.) Plaintiffe cite
evidence that Spears received nondiscretionary "'MedFlxWave' payments" based on
"preestablished criteria" as "compensation for Plaintiffs work for Defendant." (PL's
Resp. to UF 23 (citing evidence that the "MedFlxWave" payment was made to Plaintiff,
evidence that "MedFlxWave" payments are "part of our total remuneration plan," and
other evidence that the MedFlxWave payment was directly deposited into Plaintiffs
bank account).)
Given Defendant's framing of UF 23 ~ which turns on an unstated legal definition of
the word "bonus" ~ at a minimum, a material factual dispute exists as to whether the
MedFlxWave payments could potentially be characterized as nondiscretionary
"bonuses" that must be included in the "regular rate" calculation for overtime. Neither
Defendants' moving papers nor its Amended Reply papers include legal authorities
regarding payments analogous to the nondiscretionary MedFlxWave payments, nor do
they demonstrate that these cannot as a mafter of law be considered "nondiscretionary
bonuses."
With respect to "bonuses" paid to Plaintiff Arana (UF 24), Defendant again
frames the UF by conclusorily using the undefined word "bonus" rather than
making plain factual assertions independent of that legal term. Defendant
argues that it is undisputed that the "SPOT Awards" received by Plaintiff Arana
were "properly excluded from his regular rate because they were discretionary
bonuses," and undisputed that the "bonuses received by Plaintiff Arana
pursuant to the ACA Incentive Plan" were properly included in his regular rate.
(P&As at 10-12 (emphasis added); UFs 23-40.) Defendant also argues that
Plaintiff Arana never received "any other bonus payments." (P&As at 4; UF 24.)
In the Opposition, Plaintiffs do not challenge Defendants arguments regarding
"SPOT Awards," instead opting to identify evidence rendering UF 24 disputed
by virtue of Plaintiff Arana's having been paid what they argue was a "Wellness
bonus." (PL's Resp. to UF 24.) The Court notes that Defendant cannot be
heard to take issue with Plaintiffs conclusory assertion of a "bonus" when
Defendant itself conclusorily asserts the lack of a "bonus" in UF 24.
Defendant's moving papers include legal authorities regarding nondiscretionary
bonuses, but except with respect to the "SPOT" bonuses specifically, their UFs
do not include any "facts" regarding whether HNCA had any discretion in
whether to pay out other, non-"SPOT" amounts. And Plaintiffs' proffered
evidence in support of the "wellness bonus" is deposition testimony by Diane
Rodes, wherein Rodes testifies that the wellness payments were
nondiscretionary payments to employees who fulfilled certain requirements.
(Exh. 5 to Amended Declaration of Aparajit Bhowmik (transcript of deposition of
Diane Rodes) at 99-103.)
Defendant has not shown that the "wellness" payments cannot be considered
nondiscretionary bonuses as a matter of law. At a minimum, while it is apparentiy
undisputed that "wellness" payments were made to Arana, a material factual dispute
exists as to whether such "wellness" payments were in fact "bonuses" ~ or, more
accurately, were "nondiscretionary" payments that might be a required part ofthe
"regular rate" calculation^
In the Amended Reply, Defendant argues that the Court should ignore Plaintiffs'
arguments based on evidence of a "wellness" payment because such payments were
not specifically alleged in the pleading. (Amended Reply at 7-8.) The Court declines
to ignore Plaintiffs' "wellness payment" argument. The pleading alleged that
nondiscretionary bonuses were improperiy excluded from the regular rate (Complaint
40-41, 91-92), and Defendant has not shown that the pleading was required to
specifically itemize each and every alleged "bonus" payment.
Defendant has not shown entitlement to judgment as a matter of law on undisputed
facts with respect to this cause of action. The Motion is DENIED as to Issue 2.
Issue 3: Plaintiffs' failure to pay overtime wages claim premised on HNCA's
alleged failure to include shift differential premiums in the regular rate of pay
fails because these premiums were included in the regular rate calculation.
The Motion is GRANTED as to Issue 3.
Defendants moving papers and SSUF includes undisputed facts showing that HNCA
did properly include shift differential premiums in its regular rate calculation. (UFs 41-
46.) Plaintiffs expressly state that these UFs are indeed "undisputed," and their
Opposition makes no arguments as to this Issue.
While by this Order the Court also denied Defendants Motion with respect to Issues 1
and 2, which challenged the Third Cause of Action for Failure to Pay Hourly and
Overtime Wages, the Court finds it appropriate to grant Defendants Motion with
respect to Issue 3, which challenges that same Third Cause of Action insofar as it is
based on exclusion of shift differential premiums specifically. (See, e.g., Lilienthal &
Fowler V. Superior Court (Karr) (1993) 12 Cal.App.4th 1848, 1854-1856 (despite
language of Code of Civil Procedure §437c(f), trial court may determine merits of
summary adjudication motions "involving separate and distinct wrongful acts which are
combined in the same cause of action").)
Issue 4: Plaintiffs' failure to pay all wages claim premised on HNCA's alleged
rounding practice fails because HNCA did not implement any rounding practice
during the pertinent time period.
The Motion is GRANTED as to Issue 4.
Defendants moving papers and SSUF includes undisputed facts showing that HNCA
did not engage in rounding. (UFs 47-48.) Plaintiffs expressly state that these UFs are
indeed "undisputed," and their Opposition makes no arguments as to this Issue.
While by this Order the Court also denied Defendants Motion with respect to Issues 1
and 2, which challenged the Third Cause of Action for Failure to Pay Hourly and
Overtime Wages, the Court finds it appropriate to grant Defendants Motion with
respect to Issue 4, which challenges that same Third Cause of Action insofar as it is
based on engaging in rounding practices specifically. (See, e.g., Lilienthal, 12
Cal.App.4th at 1854-1856 (despite language of Code of Civil Procedure §437c(f), trial
court may determine merits of summary adjudication motions "involving separate and
distinct wrongful acts which are combined in the same cause of action").)
Seventh Cause of Action For Civil Penalties Pursuant to Labor Code §§ 2698, et
seq. (PAGA)
Issue 5: Plaintiffs PAGA claim based on alleged failure to pay overtime wages
as a result of alleged failure to include cash benefits received in lieu of medical
payment in Plaintiff Spears' regular rate of pay fails because the underlying
alleged Labor Code violation did not occur.
For the same reasons discussed above in connection with Issue 1, the Court must
deny the motion as to Issue 5. Defendant has not met its initial burden of identifying
evidence that payments of cash in lieu of benefits were in fact "contributions" from
HNCA to HNI (as its trustee or third party) pursuant to the Plan.
Accordingly, the Motion is DENIED as to Issue 5.
Issue 6: Plaintiffs' PAGA claim based on alleged failure to pay overtime wages
as alleged failure to include bonuses awarded to Plaintiffs in the regular rate of
pay calculation fails because the underling alleged Labor Code violation did not
occur.
For the same reasons discussed above in connection with Issue 2, the Court must
deny the motion as to Issue 6. Defendant has not shown entitlement to judgment as a
matter of law on undisputed facts that neither the MedFlxWave payments to Plaintiff
Spears nor the Wellness payments to Plaintiff Arana cannot, as a matter of law, be
considered "nondiscretionary bonuses" such that they would need to be included in the
"regular rate."
Accordingly, the Motion is DENIED as to Issue 6.
Issue 7: Plaintiffs' PAGA claim based on alleged failure to include shift
differential premiums in Plaintiff Arana's regular rate of pay fails because the
underlying alleged Labor Code violation did not occur.
The Motion is GRANTED as to Issue 7 for the same reasons discussed above
in connection with Issue 3.
Defendant's moving papers and SSUF includes undisputed facts showing that HNCA
did properly include shift differential premiums in its regular rate calculation. (UFs 41-
46.) Plaintiffs expressly state that these UFs are indeed "undisputed," and their
Opposition makes no arguments as to this Issue.
While by this Order the Court also denied Defendants Motion with respect to Issues 5
and 6, which challenged the Seventh Cause of Action For Civil Penalties Pursuant to
PAGA, the Court finds it appropriate to grant Defendants Motion with respect to Issue
7, which challenges that same Seventh Cause of Action insofar as it is based on
exclusion of shift differential premiums specifically. (See, e.g., Lilienthal, 12
Cal.App.4th at 1854-1856 (despite language of Code of Civil Procedure §437c(f), trial
court may determine merits of summary adjudication motions "involving separate and
distinct wrongful acts which are combined in the same cause of action").)
Issue 8: Plaintiffs PAGA claim based on alleged rounding practice fails as a
matter of law because the underlying alleged Labor Code violation did not occur.
The Motion is GRANTED as to Issue 8 for the same reasons discussed above
in connection with Issue 4.
Defendants moving papers and SSUF includes undisputed facts showing that
HNCA did not engage in rounding. (UFs 47-48.) Plaintiffs expressly state that
these UFs are indeed "undisputed," and their Opposition makes no arguments
as to this Issue.
While by this Order the Court also denied Defendants Motion with respect to Issues 5
and 6, which challenged the Seventh Cause of Action For Civil Penalties Pursuant to
PAGA, the Court finds it appropriate to grant Defendants Motion with respect to Issue
8, which challenges that same Seventh Cause of Action insofar as it is based on
exclusion of shift differential premiums specifically. (See, e.g., Lilienthal 12
Cal.App.4th at 1854-1856 (despite language of Code of Civil Procedure §437c(f), trial
court may determine merits of summary adjudication motions "involving separate and
distinct wrongful acts which are combined in the same cause of action").)
Conclusion
Defendants' Motion for Summary Adjudication is DENIED as to Issues 1, 2, 5, and 6.
Defendants' Motion for Summary Adjudication is undisputed and is GRANTED as to
Issues 3, 4, 7 and 8.
This minute order is effective immediately. Defendant is directed to prepare a formal
order complying with Code Civ. Proc. § 437c(g) and C.R.C. Rule 3.1312.
Item 6 2017-00215518-CU-PO
Yelena Kalinovskaya vs. Ranu Bros Transport, Inc.
Nature of Proceeding: Motion to Quash Deposition Subpoena
Filed By: Way, Marshall R.
Plaintiff Yelena Kalinovskaya's ("Yelena") motion to quash subpoena issued for
medical records is ruled upon as follows.
In this action, Yelena asserts a cause of action for wrongful death of her minor child,
Victoria Kalinovskaya ("Victoria"). On 7/24/2016, Victoria was a passenger in a tractor
and trailer rig that was being operated by her father, co-plaintiff Serget Kalinovskiy.
Defendant Gunn/inder Singhrana ("Singhrana") was also operating a tractor and trailer
rig. Plaintiffs allege that Singhrana and co-defendant Ranu Bros Transport, Inc.
("RBT") owned/operated the rig. Plaintiffs allege that Singhrana collided with the rig in
which Victoria was a passenger, causing her death. Yelena alleges that she has
sustained a "loss of love, companionship, comfort, affection, society, guidance,
protection, training, advice, solace, moral support, financial support and loss of
physical assistance in the operation and maintenance ofthe home." (Complaint, ^ 21.)
Singhrana and RBT (collectively "Defendants") served 2 subpoenas on Yelena's
medical providers: West Chindon Medical Group ("WCMG") and Community Outreach
Counseling ("COC").
The WCMG subpoena seeks:
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DECLARATION OF PIYA MUKHERJEE
CASE No. 34-2017-00210560-CU-OE-GDS
1 TIMOTHY J. LONG (STATE BAR NO. 137591)
tiIong@.orrick.com
2 NICHOLAS J. HORTON (STATE BAR NO. 289417)
Dhorton(a).orrick.com
3 ORRICK, HERRINGTON & SUTCLIFFE LLP
400 Capitol Mall, Suite 3000
4 Sacramento, CA 95814-4497
Telephone: +1 916 447 9200
5 Facsimile: +1 916 329 4900
6 ANNIE H. CHEN (STATE BAR NO. 292032)
annie.chen@.oirick.com
7 ORRICK, HERRINGTON & SUTCLIFFE LLP
777 Soutii Figueroa Street, Suite 3200
8 Los Angeles, CA 90017-