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FILED/ENDORSED
1 BLUMENTHAL NORDREHAUG BHOWMIK DE BLOUW LLP MAY - 6 2020
Norman B. Blumenthal (State Bar #068687)
2 Kyle R. Nordrehaug (State Bar #205975)
Aparajit Bhovraiik (State Bar #248066) Bv: R. San Miqim\
Deputy CIBFV
3 Piya Mukherjee (State Bar #274217)
Victoria B. Rivapalacio (State Bar #275115)
4 2255 Calle Clara
La Jolla, CA 92037
5 Telephone: (858)551-1223
Facsimile: (858) 551-1232
6
Attomeys for Plaintiff
7
8
9
SUPERIOR COURT OF THE STATE OF CALIFORNIA
10
IN AND FOR THE COUNTY OF SACRAMENTO
11
12
13 ANDREA SPEARS, an individual, on behalf CaseNo. 34-2017-00210560-CU-OE-GDS
of herself and on behalf of all persons
14 similarly situated. CLASS ACTION
15
Plaintiff, DECLARATION OF ERIC R. LIETZOW IN
16 OPPOSITION TO DEFENDANT'S MOTION
vs. TO STRIKE SPEARS' REPRESENTATIVE
17 PAGA CLAIMS
HEALTH NET OF CALIFORNIA, INC., a
18 Califomia Corporation; and Does 1 through
50, Inclusive,
19 Hearing Date: May 8,2020
Defendants. Hearing Time: 11:00 a.m
20 Dept.: 41
21 TOMAS R. ARANA, on behalf of himself, Action Filed: April 5,2017
all others similarly situated,
22
Plaintiff,
23
vs.
24
HEALTH NET OF CALIFORNLA, INC., a
25 Califomia corporation; and DOES 1 through
50, inclusive,
26
Defendants.
27
28
DECL. OF ERIC R. LIETZOW IN OPPOSITION TO DEFENDANT'S MOTION TO STRIKE
CASE No. 34-2017-00210560
1 DECLARATION OF ERIC R. LIETZOW
2 I, Eric R. Lietzow, declare as follows:
3 1. I am a Senior Manager at Desmond, Marcello & Amster (DM&A), a
4 valuation and litigation consulting firm. I am a Certified Public Accountant (CPA) and
5 have an undergraduate degree in business with an emphasis in accounting fi'om
6 Califomia State University, Long Beach. Attached hereto as Exhibit A is a true and
7 correct copy of my Curriculum Vitae which accurately and truthfully sets forth my
8 education, background and training. I make this declaration based on my personal
9 knowledge, and if called to testify, I could and would testify competently to the facts
10 stated in this declaration.
11 2. I have practiced in the valuation and litigation consulting profession since
12 1997 and have focused primarily on providing business valuation, economic damage,
13 and forensic accounting services to attomeys and their clients. Of particular relevance
14 to this matter is my substantial experience computing economic damages in cormection
15 with class action litigation matters.
16 3. I was retained to consuh on economic damages in connection with the
17 Andrea Spears, et al. v. Health Net of California, Inc. and Tomas R. Arana, et al. v.
18 Health Net, Inc. matters (Consolidated Case No. 34-2017-00210560-CU-OE-GDS). I
19 was currently asked to analyze time and payroll data in an attempt to quantify civil
20 penalties relating to meal break violations.
21 4. In coimection with my analysis, I was provided with nine comma-
22 delimited text files.
23 a. HNCA002624 Confidential.CSV - payroll deduction data for 2013-
24 2016 period;
25 b. HNCA002625 Confidential.csv-payroW eamings data for 2013-2016
26 period;
27 c. HNCA002626_Confidential.csv - time punch records for 2013-2016
28 period;
1
DECLARATION OF ERIC R. LIETZOW
1 d. HNCA002627JOonfidential.csv - time punch records for 2013-2016
2 period;
3 e. HNCA002628_Confidential.csv - time punch records for 2013-2016
4 period;
5 f. HNCA002629 Confidential.csv - payroll deduction data for 2017-
6 2018 period;
7 g. HNCA002630_Confidential.csv - payroll eamings data for 2017-2018
8 period;
9 h. HNCA002631_Confidential.cs\ - time records for 2017-2018 period;
10 i. HNCA002632JOonfidential.csv - fime records for 2017-2018 period;
11 5. It is my understanding that the defendant's meal break practices changed
12 in January 2017, resulting in no meal break damages after that date. As such, I focused
13 my analysis on the time and payroll records provided for the 2013 through 2016
14 period.
15 6. The three textfileswith time records during the 2013 through 2016 period
16 contained over 6.6 million individual time punch records for 3,733 unique employees.
17 To analyze the time records, Ifirstneeded to combine the time punches on a daily
18 basis. To do this, I sorted the time punches in date and time order for each employee
19 and then grouped them on a daily basis. This process resulted in 1,596,983 days of
20 time punch records. When grouped on a weekly basis, the time records contained
21 information for 347,967 work weeks between April 5, 2013 and December 30, 2016.
22 7. Since the time punch records were not originally provided on a daily
23 basis, I next reviewed the daily time records that I created for any irregularities. The
24 largest issue with the daily grouping process related to work shifts that extended fi"om
25 one calendar day, past midnight, and into to the next calendar day. This issue regularly
26 caused an odd number of time punches when grouped by calendar day. As such, any
27 record that appeared to relate to a shift that extended past midnight was not included in
28 this current analysis. Other days with an odd number of punches or other irregularities
2
DECLARATION OF ERIC R. LIETZOW
1 were also excludedfrommy analysis. In total, I excluded 27,401 days of time punch
2 informationfrommy analysis, representing 1.7% of all daily time records, leaving
3 1,569,582 daily time records in my analysis.
4 8. For the 1,569,582 time records used in my analysis, I next calculated the
5 amount of work hours and break hours based on the time punches. To do this, I
6 assumed that the first time punch for the day represented the start of the work shift,
7 while the second time punch represented the end of a work period (i.e., either the end
8 of the work day or the start of a meal break period). Similarly, I assumed that the time
9 between the third and fourth time punches and between thefifthand sixth time
10 pimches represented additional periods of work during the day. Likewise, the time
11 between each work period was assumed to be a meal break period. The hours
12 calculated for the individual work periods in each day were then added together to
13 calculate the total amount of work hours in each day.
14 9. For my current analysis, I limited the data to the periodfromApril 5,
15 2016 through December 31, 2017 (the "PAGA Period"). Within this period, I
16 identified 343,263 work days relating to 2,559 employees. These days could be
17 grouped into 76,637 work weeks and 39,251 bi-weekly pay periods.
18 10. To identify days with potential meal break violation during the PAGA
19 Period, Ifirstidentified days that would require a meal period. To do this, I looked for
20 days with greater than six (6) work hours. Approximately 94% of all work days
21 analyzed were greater than six hours in duration, and 2,551 employees worked at least
22 one shift during the PAGA Period that was greater than six hours.
23 11. For each day with greater than six work hours, I searched for late,
24 missing, and short meal periods. Late meal breaks were identified on days where the
25 meal period started after the end of thefifthhour of work. Missing meal breaks were
26 identified in days with no recorded break in the time punch records. Short meal breaks
27 were identified on days were the time records showed a meal break of shorter than 30
28 minutes. In total, I identified 46,195 days with a potential meal break violation
3
DECLARATION OF ERIC R. LIETZOW
1 relating to 1,188 employees. Approximately 93% of these violations (43,051 days)
2 were due to a late meal break. Additionally, 1,519 violations were due to days with a
3 missing meal break, while 1,625 were due to days with a short meal break.
4 12. I have been asked to calculate various civil penalties, as described in the
5 Califomia Labor Code, resultingfromthese violations.
6 13. Civil penalties were calculated pursuant to Califomia Labor Code §558
7 ("LC 558") equal to unpaid wages during the Penalty Period {Thurman v. Bayshore).
8 For each day with a meal break violation, I calculated a meal break premium equal to
9 one hour of wages. To do this, I utilized pay rate information takenfromthe payroll
10 data (HNCA002625). Hourly pay rates were calculatedfi;omthe payroll data for each
11 pay period by dividing the amount of "regular" eamings by the number of "regular"
12 hours. Then, these rates were matched to each work day in the time data based on the
13 pay periods. Hourly rates were assigned to approximately 98% of the daily time
14 records in this manner. For days where we were unable to directly match the time
15 records to a payroll pay period, I utilized average hourly rates for each employee.
16 Multiplying the number of identified meal break violations by the respective hourly
17 pay rate resulted in $1,030,379.33 of meal break premiums during the PAGA Period.
18 14. It is my understanding that certain meal break premium payments were
19 made to employees during the 2013 through 2016 time period. I have been told that
20 these payments were made under the "DTO" pay code fotmd in the payroll data.
21 Searching the payroll records during the PAGA Period resulted in 3,417 payroll
22 records coded as DTO. These records included 12,505.22 hours and $280,996.05 of
23 DTO eamings.
24 15. Deducting all $280,996.05 of DTO eamingsfromthe $1,030,379.33 of
25 calculated meal break premiums results in $749,383.28 of unpaid meal break
26 premiums. These calculations are summarized in Exhibit B, attached hereto.
27 16. It should be noted that approximately 20% of the DTO payroll records
28 included hours that were not whole numbers (e.g., "4.38 hours"). Since meal break
4
DECLARATION OF ERIC R. LIETZOW
1 premiums are usually paid as one hour per violation, it is unusually to see fractional
2 hours included in this pay code if it only relates to meal break premium payments.
3 Additionally, a large number of DTO payments were recorded in pay periods were no
4 meal break violations were identified. DTO payments were found in only 508 pay
5 periods with meal break violations (4.2% of the 12,138 pay periods with a meal break
6 violation) and 1,303 pay periods with no meal break violations identified. Finally,
7 there were many DTO records with a large number of hours, often in multiples eight
8 (e.g., 40, 48, 56, 72, or 80 hours). Therefore, it is possible that this pay coded includes
9 more than just meal break premium payments. If so, unpaid meal break premiums
10 may be higher than the amount calculated above.
11 17. In addition to unpaid wages, I have calculated a penalty equal to $50 per
12 bi-weekly pay period during the PAGA Period with unpaid meal break penahies. I
13 have assumed a violation in any period with unpaid meal break premiums. I initially
14 identified 12,138 bi-weekly pay periods with a meal break violation. However, I have
15 assumed there was no violation if DTO hours or eamings were greater than the
16 violations I identified. After removing violationsfromthose periods with sufficient
17 DTO pay, I ultimately identified 11,994 pay periods with unpaid meal break
18 premiums. Applying a $50 penalty to each of these periods results in a total penalty of
19 $599,700, as shown in Exhibit B.
20 18. I was also asked to calculate civil penalties pursuant to Califomia Labor
21 Code §2699(f)(2) for violations of Califomia Labor Code §203. This penalty was
22 calculated as $100 for each terminated employee with unpaid wages. Based on the
23 time records provided through 2018,1 estimated that 1,007 of the employees active
24 during the PAGA Period had been terminated. Of these terminated employees, 662
25 were identified as having unpaid meal break premiums. Therefore, the penalty was
26 calculated as $100 for each of these 662 terminated employees, or $66,200.
27 19. Additionally, I was asked to calculate civil penalties pursuant to
28 California Labor Code §2699(f)(2) for violations ofCalifomia Labor Code §226.7.
5
DECLARATION OF ERIC R. LIETZOW
1 This penalty was calculated as $100 for each bi-weekly pay period with unpaid meal
2 break premiums. Therefore, 11,994 pay periods with unpaid meal break premiums
3 times $100 equals $1,199,400.00.
4 20. Finally, I was asked to calculate civil penalties pursuant to Califomia
5 Labor Code §2699(f)(2) for violations ofCalifomia Labor Code §1198. This penalty
6 was calculated as $100 for each bi-weekly pay period with a violation. Therefore,
7 11,994 pay periods with unpaid wages times $100 equals $1,199,400.00.
8 21. As shown in Exhibit B, total civil penalties equal $3,814,083.28.
9 22. I reserve the right to update my analysis of damages upon the receipt of
10 additional relevant information.
11 23. I have provided trial testimony in the following matters during the last
12 four years:
13 a. In re: Massoud Tayyar, Debtor (United States Bankruptcy Court,
14 Central District ofCalifomia # 2:13-bk-37454-WB, 2015)
15 b. Curtis Patton v. Dollar Tree Stores, Inc. (United States District
16 Court, Central District ofCalifomia, Case No. CV 15-3813-MWF
17 (PFWx), 2017)
18 c. Jacqueline Burnett v. Lenaj, Inc., et al. (Sacramento County Superior
19 Court #34-2015-00184980, 2018)
20 24. In the last four years I have provided deposition testimony in the
21 following matters:
22 a. Sherry Dobrosky v. Arthur J. Gallagher Service Company, LLC, et al.
23 (Riverside Superior Court #RIC 1302147, 2014)
24 b. Elliott Olvera v. E l Polio Loco, Inc., et al. (Orange County Superior
25 Court #30-2014-00707367-CU-OE-CXC, 2015)
26 c. Christina Culley v. Lincare, Inc., et al. (United States District Court
27 for the Eastem District #2:15-cv-00081-GEB-CMK, 2016)
28 d. Laurel Rowe v. Michael Stores, Inc. (United States District Court,
6
DECLARATION OF ERIC R. LIETZOW
1 Norther District of California, Case No. 15-cv-01595-EJD, 2016)
2 e. Bonnie Cardoza v. Wal-Mart Associates, Inc. (Alameda County
3 Superior Court, Case No. RGl 5756555, 2016)
4 f. Lynn Metrow v. Liberty Mutual Managed Care, LLC (San Bemardino
5 County Superior Court, Case No. CIVDS 1602717, 2017)
6 g. Curtis Patton v. Dollar Tree Stores, Inc. (United States District Court,
7 Central District ofCalifomia, Case No. CV 15-3813-MWF (PFWx),
8 2017)
9 h. Marie Diaz-Sidbury v. Stanford Health Care (Santa Clara County
10 Superior Court, Case No. 114CV273362, 2018)
11 i. Marchella Brooks v. Securitas Security Services USA, Inc. (ADR
12 Services, No. 17-3727 KJM, 2018)
13 25. I have authored no publications in the last 10 years.
14 26. DM&A's compensation for work performed in connection with this
15 engagement is at our standard billing rates on a time and materials basis. At present,
16 my standard hourly rate is $250 and my hourly rate for testimony is $300.
17 I DECLARE UNDER PENALTY OF PERJURY UNDER THE LAWS OF
18 THE STATE OF CALIFORNIA AND THE UNITED STATES OF AMERICA THAT
19 THE FOREGOING IS TRUE AND CORRECT.
20 Executed this 14*^ day of December 2018 at Los Angeles, Califomia.
21
22
23 Eric R. Lietzow
24
25
26
27
28
DECLARATION OF ERIC R. LIETZOW
EXHIBIT "A"
PROFESSIONAL QUALIFICATIONS
ERIC R LIETZOW, CPA/ABV
SENIOR MANAGER
PROFESSIONAL BACKGROUND
Mr. Lietzow brings 20 years of experience in litigation consulting and forensic accounting to Desmond,
Marcello & Amster ("DM&A"). Mr. Lietzow specializes in the calculation of economic damages in connection
with various types of litigation matters. These assignments regularly require the analysis of financial and/or
operating data for the involved enterprise, research into economic and industry factors that may impact the
analysis, the identification and quantification of economic damages resultingfi-omalleged wrongful conduct,
and the preparation of reports to summarize the work performed and opinions reached. For many of these
projects, Mr. Lietzow is required to analyze vast amounts of data which he accomplishes by utilizing
sophisticated database and spreadsheet modeling techniques.
Of additional relevance, Mr. Lietzow has been retained as an expert witness in numerous wage and hour class
action matters. To calculate damages in these matters, he must analyze substantial volumes of data, including
payroll records, time punch data, and other employment information. The specific damages calculated using
this data typically include unpaid wages, underpaid overtime premiums, unpaid meal and rest break premiums,
unreimbursed expenses, and various statutory and civil penalties resultingfi'omlabor code violations.
When not providing economic damage or forensic accounting services to clients, Mr. Lietzow is frequently
involved in the valuation of businesses and other ownership interests for varying purposes, including gift and
estate tax, shareholder dissolution, and eminent domain. Many of the assignments completed by Mr. Lietzow
require the analysis offinancialrisksand uncertainties. In these instances, Mr. Lietzow regularly develops
discount rates and required rates of retum to properly account for the risks inherent to the cashflowsbeing
examined.
Previously, Mr. Lietzow had been involved with hundreds of class action notice and settlement administration
projects. His responsibilities included class member database design and management, settlement allocation
calculations, document preparation, coordination of notice procedures, implementation of claim form processing
protocols, payroll and income tax retum preparation, and overall project management.
Prior to joining DM&A, Mr. Lietzow was affiliated with BDO Seidman, Biggs & Company, and WGI
Solutions.
EDUCATION
Mr. Lietzow holds a bachelor's degree in business administration with an emphasis in accounting from
Califomia State University, Long Beach, where he graduated magna cum laude.
PROFESSIONAL AITILIATIONS
Mr. Lietzow is a Certified Public Accountant (CPA) in Califomia. His has also eamed the Accredited in
Business Valuation Credential (ABV), which is awarded by the American Institute of Certified Public
Accountants (AICPA). He is a member ofthe AlCPA, the Califomia Society of CPAs (CalCPA) and the
Association of Certified Fraud Examiners (ACFE).
TRIAL TESTIMONY
In re: Massoud Tayyar, Debtor (May 2015)
Analysis of reasonable interest rates on commercial loans in a bankruptcy action
Curtis Patton v. Dollar Tree Stores, Inc, et aL (November 2017)
Analysis of wage statement violations in connection with a wage and hour class action
Jacqueline Burnett v. Lenaj, Inc., et al. (December 2018)
Analysis of meal break and rest break violations in connection with an individual wage and hour action
DEPOSITION TESTIMONY
American Construction v. Shered Holiday, LLC (August 2008)
Economic damage analysis in connection with a construction contract dispute
Enrique Esparza v. Safeway Inc., et aL (March 2013)
Analysis of meal break violations in connection with a wage and hour class action
Sherry Dobrosky v. Arthur J. Gallagher Service Company, LLC, et aL (December 2014)
Analysis of unpaid wages and meal break violations in connection with a wage and hour class action
Elliott Olvera v. El Polio Loco, Inc, et al. (October 2015 and May 2018)
Analysis of unpaid wages in connection with a wage and hour class action
Christina Culley v. Lincare, Inc, et al. (June 2016)
Analysis of unpaid wages and meal break violations in connection with a wage and hour class action
Laurel Rowe v. Michaels Stores, Inc, et aL (August 2016)
Analysis of potential time shaving issues in connection with a wage and hour class action
Bonnie Cardojja v. Wal-Mart Associates, Inc, etaL (December 2016)
Analysis of unpaid wages and meal break violations in connection with a wage and hour class action
Lynn Metrow v. Liberty Mutual Managed Care, LLC, et aL (March 2017)
Analysis of unpaid wages in connection with a wage and hour class action
Curtis Patton v. Dollar Tree Stores, Inc, et aL (October 2017)
Analysis of wage statement violations in connection with a wage and hour class action
Marie Diaz-Sidbury v. Stanford Health Care, et aL (January 2018)
Analysis of meal break violations in connection with a wage and hour class action
Marchella Brooks v. Securitas Security Services USA, Inc (March 2018)
Analysis of meal break and rest break violations in connection with an individual wage and hour action
Eric R. Lietzow Page 2 of 2
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EXHIBIT "B
EXHIBIT B
ANDREA SPEARS V. HEALTH NET OF CALIFORNIA, INC.
CIVIL PENALTY SUMMARY - MEAL BREAK DAMAGES
Employees Violations Amount
LC 558 - Unpaid wages are a civil
penalty (Thurman v. Bayshore)
- Meal Break Premiums 1,788 46,195 $ 1,030,379.33
Less: All DTO Payments $ (280,996.05)
Unpaid Meal Premiums $ 749,383.28
LC 558 - Per Period Penalty 1,780 11,994 $ 599,700.00
LC 2699(f)(2) for LC 203 662 662 $ 66,200.00
LC 2699(f)(d) for LC 226.7 1,780 11,994 $ 1,199,400.00
LC 2699(f)(d) for LC 1198 1,780 11,994 $ 1,199,400.00
Total Liability $ 3,814,083.28
Start 4/5/2016
End 12/31/2016
Total Employees 2,559
-With>6HourShift(s) 2,551
- Terminated 1,007
- Terminated with Meal Violations 662
Total Workweeks 76,637
Total Pay Periods 39,251
EXHIBIT B
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FILED/ENDORSED 1 BLUMENTHAL NORDREHAUG BHOWMIK DE BLOUW LLP MAY - 6 2020 Norman B. Blumenthal (State Bar #068687) 2 Kyle R. Nordrehaug (State Bar #205975) Aparajit Bhovraiik (State Bar #248066) Bv: R. San Miqim\ Deputy CIBFV 3 Piya Mukherjee (State Bar #274217) Victoria B. Rivapalacio (State Bar #275115) 4 2255 Calle Clara La Jolla, CA 92037 5 Telephone: (858)551-1223 Facsimile: (858) 551-1232 6 Attomeys for Plaintiff 7 8 9 SUPERIOR COURT OF THE STATE OF CALIFORNIA 10 IN AND FOR THE COUNTY OF SACRAMENTO 11 12 13 ANDREA SPEARS, an individual, on behalf CaseNo. 34-2017-00210560-CU-OE-GDS of herself and on behalf of all persons 14 similarly situated. CLASS ACTION 15 Plaintiff, DECLARATION OF ERIC R. LIETZOW IN 16 OPPOSITION TO DEFENDANT'S MOTION vs. TO STRIKE SPEARS' REPRESENTATIVE 17 PAGA CLAIMS HEALTH NET OF CALIFORNIA, INC., a 18 Califomia Corporation; and Does 1 through 50, Inclusive, 19 Hearing Date: May 8,2020 Defendants. Hearing Time: 11:00 a.m 20 Dept.: 41 21 TOMAS R. ARANA, on behalf of himself, Action Filed: April 5,2017 all others similarly situated, 22 Plaintiff, 23 vs. 24 HEALTH NET OF CALIFORNLA, INC., a 25 Califomia corporation; and DOES 1 through 50, inclusive, 26 Defendants. 27 28 DECL. OF ERIC R. LIETZOW IN OPPOSITION TO DEFENDANT'S MOTION TO STRIKE CASE No. 34-2017-00210560 1 DECLARATION OF ERIC R. LIETZOW 2 I, Eric R. Lietzow, declare as follows: 3 1. I am a Senior Manager at Desmond, Marcello & Amster (DM&A), a 4 valuation and litigation consulting firm. I am a Certified Public Accountant (CPA) and 5 have an undergraduate degree in business with an emphasis in accounting fi'om 6 Califomia State University, Long Beach. Attached hereto as Exhibit A is a true and 7 correct copy of my Curriculum Vitae which accurately and truthfully sets forth my 8 education, background and training. I make this declaration based on my personal 9 knowledge, and if called to testify, I could and would testify competently to the facts 10 stated in this declaration. 11 2. I have practiced in the valuation and litigation consulting profession since 12 1997 and have focused primarily on providing business valuation, economic damage, 13 and forensic accounting services to attomeys and their clients. Of particular relevance 14 to this matter is my substantial experience computing economic damages in cormection 15 with class action litigation matters. 16 3. I was retained to consuh on economic damages in connection with the 17 Andrea Spears, et al. v. Health Net of California, Inc. and Tomas R. Arana, et al. v. 18 Health Net, Inc. matters (Consolidated Case No. 34-2017-00210560-CU-OE-GDS). I 19 was currently asked to analyze time and payroll data in an attempt to quantify civil 20 penalties relating to meal break violations. 21 4. In coimection with my analysis, I was provided with nine comma- 22 delimited text files. 23 a. HNCA002624 Confidential.CSV - payroll deduction data for 2013- 24 2016 period; 25 b. HNCA002625 Confidential.csv-payroW eamings data for 2013-2016 26 period; 27 c. HNCA002626_Confidential.csv - time punch records for 2013-2016 28 period; 1 DECLARATION OF ERIC R. LIETZOW 1 d. HNCA002627JOonfidential.csv - time punch records for 2013-2016 2 period; 3 e. HNCA002628_Confidential.csv - time punch records for 2013-2016 4 period; 5 f. HNCA002629 Confidential.csv - payroll deduction data for 2017- 6 2018 period; 7 g. HNCA002630_Confidential.csv - payroll eamings data for 2017-2018 8 period; 9 h. HNCA002631_Confidential.cs\ - time records for 2017-2018 period; 10 i. HNCA002632JOonfidential.csv - fime records for 2017-2018 period; 11 5. It is my understanding that the defendant's meal break practices changed 12 in January 2017, resulting in no meal break damages after that date. As such, I focused 13 my analysis on the time and payroll records provided for the 2013 through 2016 14 period. 15 6. The three textfileswith time records during the 2013 through 2016 period 16 contained over 6.6 million individual time punch records for 3,733 unique employees. 17 To analyze the time records, Ifirstneeded to combine the time punches on a daily 18 basis. To do this, I sorted the time punches in date and time order for each employee 19 and then grouped them on a daily basis. This process resulted in 1,596,983 days of 20 time punch records. When grouped on a weekly basis, the time records contained 21 information for 347,967 work weeks between April 5, 2013 and December 30, 2016. 22 7. Since the time punch records were not originally provided on a daily 23 basis, I next reviewed the daily time records that I created for any irregularities. The 24 largest issue with the daily grouping process related to work shifts that extended fi"om 25 one calendar day, past midnight, and into to the next calendar day. This issue regularly 26 caused an odd number of time punches when grouped by calendar day. As such, any 27 record that appeared to relate to a shift that extended past midnight was not included in 28 this current analysis. Other days with an odd number of punches or other irregularities 2 DECLARATION OF ERIC R. LIETZOW 1 were also excludedfrommy analysis. In total, I excluded 27,401 days of time punch 2 informationfrommy analysis, representing 1.7% of all daily time records, leaving 3 1,569,582 daily time records in my analysis. 4 8. For the 1,569,582 time records used in my analysis, I next calculated the 5 amount of work hours and break hours based on the time punches. To do this, I 6 assumed that the first time punch for the day represented the start of the work shift, 7 while the second time punch represented the end of a work period (i.e., either the end 8 of the work day or the start of a meal break period). Similarly, I assumed that the time 9 between the third and fourth time punches and between thefifthand sixth time 10 pimches represented additional periods of work during the day. Likewise, the time 11 between each work period was assumed to be a meal break period. The hours 12 calculated for the individual work periods in each day were then added together to 13 calculate the total amount of work hours in each day. 14 9. For my current analysis, I limited the data to the periodfromApril 5, 15 2016 through December 31, 2017 (the "PAGA Period"). Within this period, I 16 identified 343,263 work days relating to 2,559 employees. These days could be 17 grouped into 76,637 work weeks and 39,251 bi-weekly pay periods. 18 10. To identify days with potential meal break violation during the PAGA 19 Period, Ifirstidentified days that would require a meal period. To do this, I looked for 20 days with greater than six (6) work hours. Approximately 94% of all work days 21 analyzed were greater than six hours in duration, and 2,551 employees worked at least 22 one shift during the PAGA Period that was greater than six hours. 23 11. For each day with greater than six work hours, I searched for late, 24 missing, and short meal periods. Late meal breaks were identified on days where the 25 meal period started after the end of thefifthhour of work. Missing meal breaks were 26 identified in days with no recorded break in the time punch records. Short meal breaks 27 were identified on days were the time records showed a meal break of shorter than 30 28 minutes. In total, I identified 46,195 days with a potential meal break violation 3 DECLARATION OF ERIC R. LIETZOW 1 relating to 1,188 employees. Approximately 93% of these violations (43,051 days) 2 were due to a late meal break. Additionally, 1,519 violations were due to days with a 3 missing meal break, while 1,625 were due to days with a short meal break. 4 12. I have been asked to calculate various civil penalties, as described in the 5 Califomia Labor Code, resultingfromthese violations. 6 13. Civil penalties were calculated pursuant to Califomia Labor Code §558 7 ("LC 558") equal to unpaid wages during the Penalty Period {Thurman v. Bayshore). 8 For each day with a meal break violation, I calculated a meal break premium equal to 9 one hour of wages. To do this, I utilized pay rate information takenfromthe payroll 10 data (HNCA002625). Hourly pay rates were calculatedfi;omthe payroll data for each 11 pay period by dividing the amount of "regular" eamings by the number of "regular" 12 hours. Then, these rates were matched to each work day in the time data based on the 13 pay periods. Hourly rates were assigned to approximately 98% of the daily time 14 records in this manner. For days where we were unable to directly match the time 15 records to a payroll pay period, I utilized average hourly rates for each employee. 16 Multiplying the number of identified meal break violations by the respective hourly 17 pay rate resulted in $1,030,379.33 of meal break premiums during the PAGA Period. 18 14. It is my understanding that certain meal break premium payments were 19 made to employees during the 2013 through 2016 time period. I have been told that 20 these payments were made under the "DTO" pay code fotmd in the payroll data. 21 Searching the payroll records during the PAGA Period resulted in 3,417 payroll 22 records coded as DTO. These records included 12,505.22 hours and $280,996.05 of 23 DTO eamings. 24 15. Deducting all $280,996.05 of DTO eamingsfromthe $1,030,379.33 of 25 calculated meal break premiums results in $749,383.28 of unpaid meal break 26 premiums. These calculations are summarized in Exhibit B, attached hereto. 27 16. It should be noted that approximately 20% of the DTO payroll records 28 included hours that were not whole numbers (e.g., "4.38 hours"). Since meal break 4 DECLARATION OF ERIC R. LIETZOW 1 premiums are usually paid as one hour per violation, it is unusually to see fractional 2 hours included in this pay code if it only relates to meal break premium payments. 3 Additionally, a large number of DTO payments were recorded in pay periods were no 4 meal break violations were identified. DTO payments were found in only 508 pay 5 periods with meal break violations (4.2% of the 12,138 pay periods with a meal break 6 violation) and 1,303 pay periods with no meal break violations identified. Finally, 7 there were many DTO records with a large number of hours, often in multiples eight 8 (e.g., 40, 48, 56, 72, or 80 hours). Therefore, it is possible that this pay coded includes 9 more than just meal break premium payments. If so, unpaid meal break premiums 10 may be higher than the amount calculated above. 11 17. In addition to unpaid wages, I have calculated a penalty equal to $50 per 12 bi-weekly pay period during the PAGA Period with unpaid meal break penahies. I 13 have assumed a violation in any period with unpaid meal break premiums. I initially 14 identified 12,138 bi-weekly pay periods with a meal break violation. However, I have 15 assumed there was no violation if DTO hours or eamings were greater than the 16 violations I identified. After removing violationsfromthose periods with sufficient 17 DTO pay, I ultimately identified 11,994 pay periods with unpaid meal break 18 premiums. Applying a $50 penalty to each of these periods results in a total penalty of 19 $599,700, as shown in Exhibit B. 20 18. I was also asked to calculate civil penalties pursuant to Califomia Labor 21 Code §2699(f)(2) for violations of Califomia Labor Code §203. This penalty was 22 calculated as $100 for each terminated employee with unpaid wages. Based on the 23 time records provided through 2018,1 estimated that 1,007 of the employees active 24 during the PAGA Period had been terminated. Of these terminated employees, 662 25 were identified as having unpaid meal break premiums. Therefore, the penalty was 26 calculated as $100 for each of these 662 terminated employees, or $66,200. 27 19. Additionally, I was asked to calculate civil penalties pursuant to 28 California Labor Code §2699(f)(2) for violations ofCalifomia Labor Code §226.7. 5 DECLARATION OF ERIC R. LIETZOW 1 This penalty was calculated as $100 for each bi-weekly pay period with unpaid meal 2 break premiums. Therefore, 11,994 pay periods with unpaid meal break premiums 3 times $100 equals $1,199,400.00. 4 20. Finally, I was asked to calculate civil penalties pursuant to Califomia 5 Labor Code §2699(f)(2) for violations ofCalifomia Labor Code §1198. This penalty 6 was calculated as $100 for each bi-weekly pay period with a violation. Therefore, 7 11,994 pay periods with unpaid wages times $100 equals $1,199,400.00. 8 21. As shown in Exhibit B, total civil penalties equal $3,814,083.28. 9 22. I reserve the right to update my analysis of damages upon the receipt of 10 additional relevant information. 11 23. I have provided trial testimony in the following matters during the last 12 four years: 13 a. In re: Massoud Tayyar, Debtor (United States Bankruptcy Court, 14 Central District ofCalifomia # 2:13-bk-37454-WB, 2015) 15 b. Curtis Patton v. Dollar Tree Stores, Inc. (United States District 16 Court, Central District ofCalifomia, Case No. CV 15-3813-MWF 17 (PFWx), 2017) 18 c. Jacqueline Burnett v. Lenaj, Inc., et al. (Sacramento County Superior 19 Court #34-2015-00184980, 2018) 20 24. In the last four years I have provided deposition testimony in the 21 following matters: 22 a. Sherry Dobrosky v. Arthur J. Gallagher Service Company, LLC, et al. 23 (Riverside Superior Court #RIC 1302147, 2014) 24 b. Elliott Olvera v. E l Polio Loco, Inc., et al. (Orange County Superior 25 Court #30-2014-00707367-CU-OE-CXC, 2015) 26 c. Christina Culley v. Lincare, Inc., et al. (United States District Court 27 for the Eastem District #2:15-cv-00081-GEB-CMK, 2016) 28 d. Laurel Rowe v. Michael Stores, Inc. (United States District Court, 6 DECLARATION OF ERIC R. LIETZOW 1 Norther District of California, Case No. 15-cv-01595-EJD, 2016) 2 e. Bonnie Cardoza v. Wal-Mart Associates, Inc. (Alameda County 3 Superior Court, Case No. RGl 5756555, 2016) 4 f. Lynn Metrow v. Liberty Mutual Managed Care, LLC (San Bemardino 5 County Superior Court, Case No. CIVDS 1602717, 2017) 6 g. Curtis Patton v. Dollar Tree Stores, Inc. (United States District Court, 7 Central District ofCalifomia, Case No. CV 15-3813-MWF (PFWx), 8 2017) 9 h. Marie Diaz-Sidbury v. Stanford Health Care (Santa Clara County 10 Superior Court, Case No. 114CV273362, 2018) 11 i. Marchella Brooks v. Securitas Security Services USA, Inc. (ADR 12 Services, No. 17-3727 KJM, 2018) 13 25. I have authored no publications in the last 10 years. 14 26. DM&A's compensation for work performed in connection with this 15 engagement is at our standard billing rates on a time and materials basis. At present, 16 my standard hourly rate is $250 and my hourly rate for testimony is $300. 17 I DECLARE UNDER PENALTY OF PERJURY UNDER THE LAWS OF 18 THE STATE OF CALIFORNIA AND THE UNITED STATES OF AMERICA THAT 19 THE FOREGOING IS TRUE AND CORRECT. 20 Executed this 14*^ day of December 2018 at Los Angeles, Califomia. 21 22 23 Eric R. Lietzow 24 25 26 27 28 DECLARATION OF ERIC R. LIETZOW EXHIBIT "A" PROFESSIONAL QUALIFICATIONS ERIC R LIETZOW, CPA/ABV SENIOR MANAGER PROFESSIONAL BACKGROUND Mr. Lietzow brings 20 years of experience in litigation consulting and forensic accounting to Desmond, Marcello & Amster ("DM&A"). Mr. Lietzow specializes in the calculation of economic damages in connection with various types of litigation matters. These assignments regularly require the analysis of financial and/or operating data for the involved enterprise, research into economic and industry factors that may impact the analysis, the identification and quantification of economic damages resultingfi-omalleged wrongful conduct, and the preparation of reports to summarize the work performed and opinions reached. For many of these projects, Mr. Lietzow is required to analyze vast amounts of data which he accomplishes by utilizing sophisticated database and spreadsheet modeling techniques. Of additional relevance, Mr. Lietzow has been retained as an expert witness in numerous wage and hour class action matters. To calculate damages in these matters, he must analyze substantial volumes of data, including payroll records, time punch data, and other employment information. The specific damages calculated using this data typically include unpaid wages, underpaid overtime premiums, unpaid meal and rest break premiums, unreimbursed expenses, and various statutory and civil penalties resultingfi'omlabor code violations. When not providing economic damage or forensic accounting services to clients, Mr. Lietzow is frequently involved in the valuation of businesses and other ownership interests for varying purposes, including gift and estate tax, shareholder dissolution, and eminent domain. Many of the assignments completed by Mr. Lietzow require the analysis offinancialrisksand uncertainties. In these instances, Mr. Lietzow regularly develops discount rates and required rates of retum to properly account for the risks inherent to the cashflowsbeing examined. Previously, Mr. Lietzow had been involved with hundreds of class action notice and settlement administration projects. His responsibilities included class member database design and management, settlement allocation calculations, document preparation, coordination of notice procedures, implementation of claim form processing protocols, payroll and income tax retum preparation, and overall project management. Prior to joining DM&A, Mr. Lietzow was affiliated with BDO Seidman, Biggs & Company, and WGI Solutions. EDUCATION Mr. Lietzow holds a bachelor's degree in business administration with an emphasis in accounting from Califomia State University, Long Beach, where he graduated magna cum laude. PROFESSIONAL AITILIATIONS Mr. Lietzow is a Certified Public Accountant (CPA) in Califomia. His has also eamed the Accredited in Business Valuation Credential (ABV), which is awarded by the American Institute of Certified Public Accountants (AICPA). He is a member ofthe AlCPA, the Califomia Society of CPAs (CalCPA) and the Association of Certified Fraud Examiners (ACFE). TRIAL TESTIMONY In re: Massoud Tayyar, Debtor (May 2015) Analysis of reasonable interest rates on commercial loans in a bankruptcy action Curtis Patton v. Dollar Tree Stores, Inc, et aL (November 2017) Analysis of wage statement violations in connection with a wage and hour class action Jacqueline Burnett v. Lenaj, Inc., et al. (December 2018) Analysis of meal break and rest break violations in connection with an individual wage and hour action DEPOSITION TESTIMONY American Construction v. Shered Holiday, LLC (August 2008) Economic damage analysis in connection with a construction contract dispute Enrique Esparza v. Safeway Inc., et aL (March 2013) Analysis of meal break violations in connection with a wage and hour class action Sherry Dobrosky v. Arthur J. Gallagher Service Company, LLC, et aL (December 2014) Analysis of unpaid wages and meal break violations in connection with a wage and hour class action Elliott Olvera v. El Polio Loco, Inc, et al. (October 2015 and May 2018) Analysis of unpaid wages in connection with a wage and hour class action Christina Culley v. Lincare, Inc, et al. (June 2016) Analysis of unpaid wages and meal break violations in connection with a wage and hour class action Laurel Rowe v. Michaels Stores, Inc, et aL (August 2016) Analysis of potential time shaving issues in connection with a wage and hour class action Bonnie Cardojja v. Wal-Mart Associates, Inc, etaL (December 2016) Analysis of unpaid wages and meal break violations in connection with a wage and hour class action Lynn Metrow v. Liberty Mutual Managed Care, LLC, et aL (March 2017) Analysis of unpaid wages in connection with a wage and hour class action Curtis Patton v. Dollar Tree Stores, Inc, et aL (October 2017) Analysis of wage statement violations in connection with a wage and hour class action Marie Diaz-Sidbury v. Stanford Health Care, et aL (January 2018) Analysis of meal break violations in connection with a wage and hour class action Marchella Brooks v. Securitas Security Services USA, Inc (March 2018) Analysis of meal break and rest break violations in connection with an individual wage and hour action Eric R. Lietzow Page 2 of 2 55 EXHIBIT "B EXHIBIT B ANDREA SPEARS V. HEALTH NET OF CALIFORNIA, INC. CIVIL PENALTY SUMMARY - MEAL BREAK DAMAGES Employees Violations Amount LC 558 - Unpaid wages are a civil penalty (Thurman v. Bayshore) - Meal Break Premiums 1,788 46,195 $ 1,030,379.33 Less: All DTO Payments $ (280,996.05) Unpaid Meal Premiums $ 749,383.28 LC 558 - Per Period Penalty 1,780 11,994 $ 599,700.00 LC 2699(f)(2) for LC 203 662 662 $ 66,200.00 LC 2699(f)(d) for LC 226.7 1,780 11,994 $ 1,199,400.00 LC 2699(f)(d) for LC 1198 1,780 11,994 $ 1,199,400.00 Total Liability $ 3,814,083.28 Start 4/5/2016 End 12/31/2016 Total Employees 2,559 -With>6HourShift(s) 2,551 - Terminated 1,007 - Terminated with Meal Violations 662 Total Workweeks 76,637 Total Pay Periods 39,251 EXHIBIT B