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

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                                1   TIMOTHY J. LONG (STATE BAR NO. 137591)
         tjlong@orrick.com
     2   ORRICK, HERRINGTON & SUTCLIFFE LLP                                                        PH 1:39
         400 Capitol Mall, Suite 3000
     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.Iee@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   Attorneys for Defendant
         HEALTH NET OF CALIFORNIA, INC.
    10
                            SUPERIOR COURT OF THE STATE OF CALIFORNIA
    11
                                         COUNTY OF SACRAMENTO
    12
    13   ANDREA SPEARS, an individual, on behalf of         Case No. 34-2017-00210560-CU-OE-GDS
         herself and on behalf of all persons similarly
    14   situated.                                          SEPARATE STATEMENT OF
                                                            UNDISPUTED MATERIAL FACTS IN
    15                     Plaintiff,                       SUPPORT OF DEFENDANT HEALTH
                                                            NET OF CALIFORNIA, INC.'S
    16          V.                                          MOTION FOR SUMMARY
                                                            ADJUDICATION
    17   HEALTH NET OF CALIFORNIA, INC., a
         California Corporation; and Does 1 through 50,     Date:            April 26,2018
    18   inclusive,                                         Time:            9:00 a.m.
                                                            Dept.:           54
    19                     Defendants.                      Reservation No.: 2313007
    20
         TOMAS R. ARANA, on behalf of himself, all          Complaint Filed: April 5, 2017
    21   others similarly situated,                         FAC Filed:       June 29, 2017
                                                            Consolidated Complaint Filed: Dec. 2,2017
    22                     Plaintiff
                                                            Complaint Filed: August 1, 2017
    23
    24   HEALTH NET OF CALIFORNIA, INC., a
<
z   25   California corporation; and DOES 1-50,
         inclusive.
    26
g   27
                           Defendant.

    28
o         SEPARATE STATEMENT OF UNDISPUTED MATERIAL FACTS IN SUPPORT OF DEFENDANT HEALTH NET OF CALIFORNIA.
                                      INC.'S MOTION FOR SUMMARY ADJUDICATION
 1           Pursuant to California Code of Civil Procedure Section 437(c), Defendant Health Net of
 2   California, Inc. ("HNCA") submits the following Separate Statement of Undisputed Material
 3   Facts, together with references to supporting evidence, in support of its Motion for Summary
4    Adjudication as to Plaintiffs Andrea Spears and Tomas Arana's (collectively "Plaintiffs") claim
 5 that HNCA failed to properly calculate their regular rates of pay for purposes of determining their
 6   overtime compensation, that it failed to pay all wages by improperly rounding their start times,

 7   and their derivative PAGA allegations based thereon.

 8              SEPARATE STATEMENT OF UNDISPUTED FACTS AND EVIDENCE
 9   1.      THIRD CAUSE OF ACTION FOR FAILURE TO PAY HOURLY WAGES AND
             FAILURE TO PAY OVERTIME WAGES
10
     Issue 1:        Plaintiffs' Failure to Pay Overtime Wages claim premised on HNCA's alleged
11                   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
12                   from her regular rate calculation under the Benefit-Plan Contributions
                     Exception.
13
14 m m m ^ t B 0 k i m k Fattsja'rirf Suppofrtingf 1 • / v.'' j 'VPlainMfiP^sltespd^
                                                                  i
15
16   1. Plaintiff Spears served as a non-exempt HNCA
17        customer service representativefromSeptember
18        2014 to October 2016 in Rancho Cordova.
19
20   Declaration of Diane C. Rodes (hereinafter "Rodes
21   Dec") 113.
22   2. Plaintiff Arana began working out of the Rancho
23        Cordova call center in 2008 and continues to work
24        there now. He started as a non-exempt customer
25        service representative for HNCA until his
26        promotion on or about November 14, 2015 to
27        Contact Center Analyst, an exempt position. Since
28
                                                      1
       SEPARATE STATEMENT OF UNDISPUTED MATERIAL FACTS IN SUPPORT OF DEFENDANT HEALTH NET OF CALIFORNIA,
                                   INC.'S MOTION FOR SUMMARY ADJUDICATION
 1
            Jime 2017, Plaintiff Arana has been working as a
 2
            Call Center Systems Analyst I, also an exempt
 3
        position.
 4
 5
     Rodes Dec, 14.
 6
     3. Between January 1, 2001 and December 31, 2016,
 7
        HNI sponsored a cafeteria plan - a written health
 8
        and welfare plan - called the "Health Net, Inc.
 9
        Associates Benefit Program" (the "Plan"), which
10
        HNCA adopted for the benefit of its employees.
11
12
     Declaration of Debbie Colia ("Colia Dec"), 12, Exhs.
13
     A-I.
14
     4. The Plan was governed by Section 125 of the
15
        Internal Revenue Code, was subject to the
16
        Employee Retirement Income Security Act, and
17
        was overseen by a Benefits Committee.
18
19
     Colia Dec, p .
20
     5. As called for in the Plan, the Benefits Committee
21
        hadfiduciaryduties and responsibilities to ensure
22                                                                         -,
        that HNCA's employer contributions to the Plan
23
        were tracked, kept in a separate account, and used
24
        only for proper Plan purpose related to the health
25
        and welfare benefits of HNCA employees,
26
        including Plaintiffs and their dependents.
27
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                                                     -2-
       SEPARATE STATEMENT OF UNDISPUTED MATERIAL FACTS IN SUPPORT OF DEFENDANT HEALTH NET OF CALIFORNIA,
                                   INC.'S MOTION FOR SUMMARY ADJUDICATION
 1
     Colia Dec, 113.
 2
     6. HNI treated HNCA as a third party for purposes of
 3
        administering the plan and vice versa.
 4
 5
     Colia-Dec, H 4.
 6
     7. Pursuant to the terms of the Plan, HNCA paid the
 7
        actual costs of benefits under the plan for its eligible
 8
        employees who elected to participate
 9
        ("Participants"), including Plaintiffs, and their
10
        dependents.
11
12
     Colia Dec, 14.
13
     8. Pursuant to a funded arrangement between HNI and
14
        HNCA, HNCA arranged for the monies used to pay
15
        the actual costs of benefits to be deposited into an
16
        account maintained and controlled by HNI as the
17
        Plan's sponsor.
18
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     Colia Dec, H 4.
20
     9. The contributions made by HNCA pursuant to the
21
        Plan were irrevocable - once the contributions were
22
        made to HNI, HNCA was unable to recapture or
23
        divert the funds for HNCA's use or benefit.
24
25
     Colia Dec, H 4.
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     10. The benefits available under the Plan, including the
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        various coverage options and co-payments a
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                                                     -3-
      SEPARATE STATEMENT OF UNDISPUTED MATERIAL FACTS IN SUPPORT OF DEFENDANT HEALTH NET OF CALIFORNIA,
                                  INC. 'S MOTION FOR SUMMARY ADJUDICATION
 1
        Participant was responsible for with respect to the
 2
        Plan's various covered services and supplies, were
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        explained in detail to HNCA employees in
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        Summary Plan Descriptions (the "Plan SPD") and
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        Evidence of Coverage ("EOC") documents.
 6
 7
     Colia Dec, Ht 5-6, Exs. K-L.
 8
     11. The Plan provided "core" benefit to Participants
 9
        such as basic life and basic AD&D insurance at no
10
        cost to the Participants.
11
12
     Colia Dec, Hlf 5-7, Exs. K-L.
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     12. It also provided "optional" benefits to Participants
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        and/or their dependents, such as medical and dental
15
        coverage, to select as desired based on then:
16
        particular needs.
17
18
     Colia Dec, H 8.
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     13. To help pay for the cost of medical and dental
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        coverage and pursuant to the Plan, Participants
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        received "Flex Dollars."
22
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     Colia Dec, H 9; Rodes Dec, If 5.
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     14. The exact amount of "Flex Dollars" to which a
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        Participant was entitled to varied depending on the
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        medical and dental plans that he or she chose, the
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        number of dependents covered and the Participant's
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                                                    .4.
      SEPARATE STATEMENT OF UNDISPUTED MATERL«LL FACTS IN SUPPORT OF DEFENDANT HEALTH NET OF CALIFORNLA,
                                  INC'S MOTION FOR SUMMARY ADJUDICATION
 1
        geographic location, but generally, the amoimt was
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        less than the total cost of the benefit(s) that a
 3
        participant elected.
 4
 5
     Colia Dec, H 9; Rodes Dec, HI 6-10, Exs. A, B.
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     15. In a vast majority of cases, the Participant was
 7
        required to contribute some amount toward the cost
 8
        of the benefit(s) he or she selected, and the portion
 9
        of the benefit coverage was deducted from his or
10
        her paycheck.
11
12
     Colia Dec, f 9.
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     16. Eligible employees imder the Plan could waive one
14
        or more of the available benefits.
15
16
     Colia Dec, H 10.
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     17. Waiver of medical coverage was only permitted
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        where the employee had other medical coverage,
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        such as through a spouse's plan.
20
21
     Colia Dec, 110.
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     18. In the event that a Participant waived medical
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        and/or dental coverage, the Plan provided that the
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        Participant would receive a portion of the Flex
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        Dollars as cash in his or her paycheck.
26
27
     Colia Dec, H 11; Rodes Dec, H 7.
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                                                       -5-
      SEPARATE STATEMENT OF UNDISPUTED MATERIAL FACTS IN SUPPORT OF DEFENDANT HEALTH NET OF CALIFORNIA,
                                  INC.'S MOTION FOR SUMMARY ADJUDICATION
 1
     19. In each of the Plan years 2013, 2014,2015 and
 2
        2016, the total cash benefits provided to
 3
        Participants who waived dental and/or medical
 4
        coverage represented a very small percentage of
 5
        HNCA's contributions provided under the Plan for
 6
        the elected dental and/or medical coverage: 1.4% in
 7
        2013, 1.3% in 2014; 0.9% in 2015; and 0.9% in
 8
        2016.
 9
10
     Declaration of Kelly Sarabia ("Sarabia Dec), IH 2-5.
11
     20. Throughout Plaintiff Spears employment with
12
        HNCA, she elected dental coverage.
13
14
     Rodes Dec, Tli 6, 9, Ex. A.
15
     21. Plaintiff Spears waived medical coverage during
16
        her employment with HNCA, and as a result,
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        received a cash benefit of $20.00 per pay period
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        pursuant to the Plan.
19
20
     Rodes Dec,     8-9, Ex. A.
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     22. During Plaintiff Arana's employment with HNCA,
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        he elected to received both medical and dental
23
        coverage and thus never received any cash benefits
24
        in lieu of coverage.
25
26
     Rodes Dec, H 10, Ex. B.
27
28

      SEPARATE STATEMENT OF UNDISPUTED MATERIAL FACTS IN SUPPORT OF DEFENDANT HEALTH NET OF CALIFORNIA
                                  INC. 'S MOTION FOR SUMMARY ADJUDICATION
 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
 2                       bonus payments were properly accounted for in the regular rate calculation.
 3
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 4
     ._^Eyi(cfefic;e:r     •• j ' ; - - ,r • •     ' .'^.^   ^'          ;
 5
      23. At no time during Plaintiff Spears' employment
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           vvith HNCA did she receive any bonus payments.
 7
 8
      Rodes Dec, 111.
 9
      24. Throughout Plaintiff Arana's employment with
10
          HNCA, his bonuses have been limited to only
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          bonuses through the SPOT Cash Awards Program
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          ("SPOT") and incentive pay pursuant to the ACA
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          Customer Service & Claims Representative Pay for
14
          Performance Incentive Plan ("ACA Incentive
15
          Plan").
16
17
      Rodes Dec, HH 12,18,21, Exs. E, G.
18
     25. Begmning January 1, 2014 and continuing through
19
20        December 31, 2016, HNCA adopted SPOT.

21
22    Rodes Dec, H 13.

23   26. Through SPOT, HNCA spontaneously rewarded

24        certain employees "who demonstrate[d] exceptional

25        behavior on the job . . . whether it [wa]s within or

26        beyond [the employee's] job scope."

27
28   Rodes Dec, 1113, Ex. C.
                                                                  7-
        SEPARATE STATEMENT OF UNDISPUTED MATERIAL FACTS IN SUPPORT OF DEFENDANT HEALTH NET OF CALIFORNIA,
                                    INC.'S MOTION FOR SUMMARY ADJUDICATION
 1
      27. HNCA's SPOT policy informed eligible employees
 2
         that bonuses were awarded without any promise or
 3
         incentive being announced beforehand.
 4                                                                                                 -

 5
      Rodes Dec, 1113, Ex. C.
 6
      28. There were no pre-established criteria for awarding
 7
         SPOT bonuses or pre-established amounts to be
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         awarded.
 9
10
      Rodes Dec, HH 13-14, Ex. C.
11
      29. The decision of when, for what reason, and in what
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         amount to award a SPOT bonus - within a range
13
         was subject to the discretion of managers and the
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         ultimate approval of the head of the appropriate
•15
         Business Unit.
16
17
      Rodes Dec, HH 13-17, Ex. C, D.
18
      30. Each Business Unit Leader was allotted an annual
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         SPOT bonus budget that he or she could elect to use
20
         in full, in part, or not at all.
21
22
      Rodes Dec, nil 13,17, Ex. C.
23
      31. Procedurally, a SPOT bonus was initiated if a
24
         manager felt that an employee on his or heir team
25
         should receive one.
26
27
      Rodes Dec, HH 13, 16, Ex. C.
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                                                    -8-
        SEPARATE STATEMENT OF UNDISPUTED MATERIAL FACTS IN SUPPORT OF DEFENDANT HEALTH NET OF CALIFORNIA,
                                    INC.'S MOTION FOR SUMMARY ADJUDICATION
 1
     32. The manager had the discretion to complete the
 2
        SPOT Award Nomination Form detailing the reason
 3
        for nomination, describing the achievement, and
 4
        identifying a specific amount he or she believed
 5
        appropriate.
 6
 7
     Rodes Dec, HH 13-14, 16, Exs. C, D.
 8
     33. The manager would submit the completed SPOT
 9
        Award Nomination Form to the head of his or her
10
        Busmess Unit.
11
12
     Rodes Dec, H 16.
13
     34. The Business Unit Leader exercised his discretion
14
        as to whether to award the SPOT bonus based on
15                                                                             J

        the manager's recommendation (or not) and, if so,
16
        in what amount.
17
18
     Rodes Dec, H 17.
19
     35. If the Business Unit Leader decided to award an
20
        employee with a SPOT bonus, the bonus appeared
21
        on the recipient's paycheck with the designation
22
        "Bonus - SPOT."
23
24
     Rodes Dec, HH 17-18, Ex. E.
25
26
27
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                                                   -9-
      SEPARATE STATEMENT OF UNDISPUTED MATERIAL FACTS IN SUPPORT OF DEFENDANT HEALTH NET OF CALIFORNIA,
                                  INC. 'S MOTION FOR SUMMARY ADJUDICATION
 1
     36. SPOT bonuses were not included in non-exempt
 2
        recipients' regular rate calculation because SPOT
 3
        bonuses were discretionary bonuses.
 4
 5
     Rodes Dec, HH 17-18, Ex. E.
 6
     37. Starting January 3, 2014 and lasting through May
 7
        31,2014, HNCA implemented the ACA Incentive
 8
        Plan for eligible employees.
 9
10
     Rodes Dec, H 19, Ex. F.
11
     38. The purpose of the ACA Incentive Plan was to
12
        provide an extra reward if employees voluntarily
13
        worked overtime due to the increase in workload,
14
        especially at the call centers,
15
16
     Rodes Dec, H 19, Ex. F.
17
     39. Under the ACA Incentive Plan, eligible employees
18
        who worked a certain number of overtime hours
19
        each month received bonus payments.
20
21
     Rodes Dec, H 19, Ex. F.
22
     40. Bonus payments pursuant to the ACA Incentive
23
        Plan were included in non-exempt recipients'
24
        regular rate of pay.
25
26
     Rodes Dec, HH 20-21, Ex. G.
27
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                                                  -10-
      SEPARATE STATEMENT OF UNDISPUTED MATERIAL FACTS IN SUPPORT OF DEFENDANT HEALTH NET OF CALIFORNIA,
                                  INC. 'S MOTION FOR SUMMARY ADJUDICATION
 1   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
 2                   because these premiums were included in the regular rate calculation.
 3
     '.ShBisiintld:^^^                                          ':flS|m?^fiFsiiftei?^^
 4
 5
     41. HNCA provides shift differential pay when more
 6
         than half of a non-exempt employee's regularly
 7
         scheduled working hours fall outside 7:00 a.m. and
 8
         5:00 p.m.
 9
10
     Rodes Dec, H 22, Ex. H.
11
     42. If more than half of an employee's regularly
12
         scheduled hours fall in the "second shift" - between
13
         3:00 p.m. and 12:00 a.m. - he or she is eligible to
14
         receive a 8% premium pay for all hours worked.
15
16
     Rodes Dec, H 22, Ex. H.
17
     43. If more than half of an employee's regularly
18
         scheduled hours fall in the "third shift" - between
19
         11:00 p.m. and 7:00 a.m. - he or she is eligible to
20
         receive a 12% premium pay for all hours worked.
21
22
23   Rodes Dec, H 22, Ex. H.

24   44. Shift differentials are identified in recipients'

25       paycheck and included in their regular rates.

26
27   Rodes Dec, HH 22, 24, Exs. H, I .

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                                                         11
       SEPARATE STATEMENT OF UNDISPUTED MATERIAL FACTS IN SUPPORT OF DEFENDANT HEALTH NET OF CALIFORNLA,
                                   INC.'S MOTION FOR SUMMARY ADJUDICATION
 1
      45. Plaintiff Spears never worked any second or third
 2
          shifts and thus, never received any shift differential
 3
          pay.
 4
 5
      Rodes Dec, H 23.
 6
      46. Plaintiff Arana worked the second shift on a few
 7
          occasions and received corresponding shift
 8
          differential pay that was included in his regular rate.
 9
10
      Rodes Dec, H 24, Ex. 1.
11
12    Issue 4:        Plaintiffs' Failure to Pay AH Wages claim premised on HNCA's alleged
                      rounding practice fails because HNCA did not implement any rounding
13                    practice during the pertinent time period.
14
     cl!i)jidispute^a;Ma1terial,lacts^^^                 i?        .
15
16
      47. At all times during the relevant time period, HNCA
17
          has not rounded its employees' recorded time for
18
19        purposes of generating paychecks.

20
21   Rodes Dec, H 25.

22   48. HNCA's time keeping system does not round any

23       payable time increments.

24
25   Rodes Dec, H 26.

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                                                      -12-
        SEPARATE STATEMENT OF UNDISPUTED MATERIAL FACTS IN SUPPORT OF DEFENDANT HEALTH NET OF CALIFORNIA,
                                    INC.'S MOTION FOR SUMMARY ADJUDICATION
 1
      49. All HNCA non-exempt employees, including
 2
          Plaintiffs, were responsible for inputting their exact
 3
          in (start) and out (stop) times mto the timekeeping
 4
          system, and were paid based on what they reported.
 5
 6
      Rodes Dec, H 27
 7
 8 2.        SEVENTH CAUSE OF ACTION FOR CIVIL PENALTIES PURSUANT TO
             LABOR CODE 2698. ET SEP. (PAGA)
 9
      Issue 5:       Plaintiffs' PAGA claim based on alleged failure to pay overtime wages as a
10                   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
11                   alleged Labor Code violation did not occur.
12
     ; i | e j t e n d ^ Y $ ' ' =                                 ; l^aistW-'s: :R?spjohs|; andrS^app^^
13
     ;iSuppontihg«Eyia«ief^^^: '•:> v^.--- - K'-y. ^ f ^ ^ - i , • ^ • imid^cp y;:f^:
14
     HNCA incorporates Undisputed Material Facts 1-22 as
15
     though fully re-Stated herein.
16
17 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
18                   pay calculation fails because the underlying alleged Labor Code violation did
                     not occur.
19
20 a%fehBant&vJ^aflispu^^                                          • ElaintiflrSfRlespjohs^^^

21 ;;'^upp;grhhg{feyirf!^^^^ '•; '.v^.^f ''^,}'\%
22   HNCA incorporates Undisputed Material Facts 23-40
23   as though fiilly re-stated herein.
24
25
26
27
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                                                       13
       SEPARATE STATEMENT OF UNDISPUTED MATERIAL FACTS IN SUPPORT OF DEFENDANT HEALTH NET OF CALIFORNIA,
                                   INC.'S MOTION FOR SUMMARY ADJUDICATION
 1    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
 2                    alleged Labor Code violation did not occur.
 3
     ^^ja^iispiil^                                        / ; ;      PlaintiiT^s Response and Suppdrtuig
 4
     |Eyt|eip^:,/;:,Y^ '\- ' /;' /•              ;.:r'"::^4]
 5
      HNCA mcorporates Undisputed Material Facts 41-46
 6
      as though fully re-stated herein.
 7
      Issue 8:        Plaintiffs' PAGA claim based on alleged rounding practice fails as a matter of
 8                    law because the underlying alleged Labor Code violation did not occur.
 9
     ' j^iiditp.uted Mateifiy F'Mt!s)«^apj3' Supp6;Ftin'g ' ,     •' jPfaintiff^si Meiiponsi^^^^           f;
10
     ^ Eyil^ence':.                                                 ;".,Eyi)fifenc;e,:f"           .
11
12   HNCA incorporates Undisputed Material Facts 47-49

13   as though fiilly re-stated herein.

14
     Dated: February 5, 2018                             ORRICK, HERRINGTON & SUTCLIFFE LLP
15
16
                                                          By:
17                                                                     STEPHANIE GAIL LEE
                                                                       Attorneys for Defendant
18                                                                HEALTH NET OF CALIFORNIA, INC.
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                                                       14-
       SEPARATE STATEMENT OF UNDISPUTED MATERIAL FACTS IN SUPPORT OF DEFENDANT HEALTH NET OF CALIFORNIA,
                                   INC.'S MOTION FOR SUMMARY ADJUDICATION