NATHANAEL M. COUSINS, District Judge.
IT IS STIPULATED by the parties through their attorneys of record that Plaintiff Diane B. Gu may file the second amended complaint which is attached to this stipulation (without its two exhibits). Defendants consent to Plaintiff's request to amend her first amended complaint to dismiss the following defendants:
To add the following defendants:
To add the following claims and the additional facts to support them:
As a result of this amendment, the parties also request that the Court continue the initial case management conference in this case to any date convenient for the Court after September 19, 2016, and extend the parties' deadlines to comply with Rule 26 and the Court's Civil Local Rules including 3.5, 16-9, and 16-10 concurrently with the continuance of the case management conference to enable the parties to finalize the pleadings, continue settlement discussions, and meet and confer on the Rule 26 issues.
It is so stipulated.
Based on the parties' stipulation, IT IS ORDERED that Ms. Gu shall file her second amended complaint which is attached to this stipulation and order within ten days of this order. Ms. Gu shall attach Exhibits 1 and 2 with the second amended complaint filed with the Court. Defendants shall file their responsive pleading by August 29, 2016.
The initial case management conference in this case is continued until 10:00 a.m. on ____________________, 2016. The deadlines for the pre-conference items listed in the Order Setting Initial Case Management Conference and ADR Deadlines are continued concurrently with this order.
Plaintiff, Diane B. Gu, alleges as follows:
1. This action is brought on behalf of Diane B. Gu under the Employee Retirement Income Security Act of 1974, 29 U.S.C. 1001, et seq. ("ERISA"). Ms. Gu seeks to recover benefits due and enforce her rights under the terms of the Pharmacyclics, Inc. Change in Control and Severance Plan (the "Severance Plan"), reinstatement and restitution including back pay and lost benefits, and to obtain equitable and statutory relief for to the administrator's failure to comply with the terms of the Severance Plan and ERISA. Ms. Gu seeks a determination that she is entitled to the administrator's benefits file, statutory penalties for the administrator's refusal to provide the file, reinstatement and back pay and lost benefits, and/or severance benefits under the Severance Plan and ERISA as a result of Pharmacyclics' termination of her employment, and her attorneys' fees and costs.
2. The Court has jurisdiction of these claims for relief which involve federal statutes under Section 1331 of Title 28 of the United States Code.
3. Venue is proper in this District Court under Section 1132(e)(2) of Title 29 of the United States Code.
4. Plaintiff Diane B. Gu ("Ms. Gu") is an individual residing in Santa Clara County in California. References to Ms. Gu include her agents.
5. Defendant Pharmacyclics, LLC is a wholly-owned subsidiary of AbbVie Inc. ("AbbVie") and successor-in-interest to Defendant Pharmacyclics, Inc., the plan sponsor and original administrator of the Severance Plan. The two Pharmacyclics defendants will be jointly referred to as PCYC unless otherwise noted.
6. Defendant Mark Naidicz ("Naidicz") served at all times relevant to this complaint as the Vice President of Business Human Resources for AbbVie. Naidicz is named as the administrator of the Severance Plan under an amendment to the Severance Plan.
7. Defendant Nancy Claybaugh ("Claybaugh") served at all times relevant to this complaint as the Head of Human Resources for PCYC. Naidicz delegated some of his responsibilities and authority as administrator under the Severance Plan, including over Ms. Gu's claims for benefits, to Claybaugh, who administers the Severance Plan from PCYC's corporate offices in Sunnyvale, California.
8. Ms. Gu was employed by PCYC as a Senior Manager of Corporate Planning Financial Planning and Analysis. Senior Finance Director Dilip Kathuria ("Kathuria") hired Ms. Gu and was her supervisor during her tenure at PCYC.
9. On Thursday, July 16, 2015, Ms. Gu resigned in the heat of the moment during a confrontation with Kathuria which humiliated her. Kathuria immediately texted Ms. Gu: "[h]i Diane . . . take some time . . . if after 48 hours you still want to leave I will accept" ("48-Hour Offer"). Ms. Gu responded by text, saying, "[o]k . . . we should talk . . ." This exchange created an agreement between PCYC and Ms. Gu that Ms. Gu would continue as a PCYC employee while she reconsidered her resignation and, if Ms. Gu informed Kathuria after 48 hours that she still wanted to resign, then her resignation would be effective when she informed Kathuria. If Ms. Gu did not confirm that she still wanted to resign, she would continue as an employee (the "48-Hour Agreement"). The facts of this exchange and what followed are set forth in the Declaration of Diane Gu Under Penalty of Perjury in Support of Claim for Benefits (which was provided to Defendants on February 16, 2016, with Ms. Gu's appeal from the denial of her benefits claim) which is attached as Exhibit 1.
10. After reaching the 48-Hour Agreement, Kathuria asked to meet, and met, with Ms. Gu on Friday, July 17, at a Starbucks restaurant for 1½ hours, exchanged texts with her on July 16, 17, 18, and 19 about work issues and ideas, and called her on Sunday July 19. Ms. Gu made written statements within 48 hours of the 48-hour Offer that indicated her desire to continue working, including (1) on July 17 requesting that PCYC restore her employee email account; and (2) on July 18 promising not to leave in the heat of the moment. Despite Kathuria's assurance during the July 19 telephone call that he was going to ask HR to withdraw her resignation, on July 20 Kathuria told Ms. Gu that he was "accepting" her resignation. PCYC's first written notification to Ms. Gu of the termination of her employment was by document dated July 22, 2015, which listed July 20, 2015, as the date of termination.
11. Pharmacyclics, Inc. was named as administrator in the original Severance Plan. The Severance Plan also originally provided that Pharmacyclics, Inc. would act as administrator through its Compensation Committee. Edward M. Liddy, Roxanne S. Austin, Glenn F. Tilton and Frederick H. Waddell comprise the Compensation Committee (collectively the "Compensation Committee").
12. The Severance Plan contains Section 25 entitled "Statement of ERISA Rights:" which includes this language:
13. The Severance Plan contains Section 2.7 entitled "Involuntary Termination" which includes this language:
Ms. Gu did not voluntarily resign as she complied with the terms of the 48-Hour Agreement and let Kathuria know that she wanted to continue as an employee both within 48 actual hours and before PCYC terminated her on July 20, 2015.
14. On September 17, 2015, Ms. Gu submitted a claim for benefits under the Severance Plan to Defendants. In her claim, Ms. Gu also asked for a copy of her benefits file, including all documents concerning her termination from PCYC including texts, emails, electronically stored documents (ESI) and all other documents (the "Benefits File"). When Claybaugh failed to provide the Benefits File, on November 24, 2015, Ms. Gu's counsel sent another letter requesting the Benefits File, specifying the documents and ESI requested:
Claybaugh again failed to provide the Benefits File.
15. Also on November 25, 2015, Administrative Law Judge Pamela Cooke of the California Unemployment Insurance Appeals Board ("CUIAB") Office of Appeals held a hearing on Ms. Gu's appeal from the denial of her unemployment benefits. PCYC denied to the CUIAB that it had terminated Ms. Gu, and claimed that she resigned. PCYC's counsel called Kathuria as PCYC's witness. Kathuria gave an incredible explanation of the events, testifying that all of his communications with Ms. Gu after July 16 (including meeting with her at Starbucks and the texts on July 16, 17, 18, and 19, and his telephone call with Ms. Gu on July 19) were not to work with Ms. Gu to stay at PCYC but to find out what had happened and to retrieve PCYC's laptop. Judge Cooke interrogated both Kathuria and Ms. Gu, who testified on her own behalf.
16. On December 8, 2015, Judge Cooke issued the CUIAB's decision. After hearing Kathuria and Ms. Gu's testimony and reviewing their communications, Judge Cooke found that PCYC had involuntarily terminated Ms. Gu. Judge Cooke began by setting out the issue: whether the claimant had left PCYC voluntarily without good cause. Judge Cooke explained why she believed Ms. Gu's testimony over PCYC's (Kathuria's) testimony:
(emphasis added). Judge Cooke explained why she determined that the "moving party" was PCYC and not Ms. Gu:
(emphasis added). Finally Judge Cooke rendered her holding:
PCYC appealed the decision.
17. On December 18, 2015, Claybaugh denied Ms. Gu's benefits claim, stating that Ms. Gu voluntarily resigned:
(emphasis added). In making this decision, Claybaugh ignored all of the facts submitted by Ms. Gu including Kathuria's written 48-Hour Offer, the text exchanges Ms. Gu had with Controller Westermeyer and Kathuria on July 16, 17, 18, and 19, Kathuria's July 17 Starbucks meeting with Ms. Gu, and his July 19 telephone call with Ms. Gu. Claybaugh ignored Judge Cooke's December 8 decision that PCYC had terminated Ms. Gu, not even mentioning it in her denial. Claybaugh's decision was inconsistent with all of the evidence. And Claybaugh again failed to deliver the Benefits File.
18. On February 16, 2016, Ms. Gu appealed the denial of her claim for benefits to Claybaugh. Ms. Gu included with her appeal the transcript of Kathuria's testimony, Judge Cooke's decision, the text communications between Kathuria, PCYC's Controller Christopher Westermeyer, and Ms. Gu, and Ms. Gu's declaration under penalty of perjury (Ex. 1). She informed Claybaugh that her preparation of the appeal had been hampered by the lack of the Benefits File. Still Claybaugh did not provide the Benefits File.
19. On February 25, 2016, the CUIAB issued its decision affirming Judge Cooke's ruling that PCYC terminated Ms. Gu. The Board reviewed the facts and agreed with Judge Cooke that, after Diane resigned, PCYC asked Diane to reconsider, giving her 48 hours; PCYC continued to have discussions with Diane that were "reasonably understood to be regarding whether she would return to work;" and that PCYC "essentially did not accept the claimant's resignation, and it was withdrawn prior to the employer deciding to accept her resignation." Then the Board issued its holding:
20. On March 3, 2016, Ms. Gu sent Claybaugh by Federal Express a letter containing supplemental information including the CUIAB's February 25, 2016, decision.
21. Under the Severance Plan Claybaugh had 60 days to decide Ms. Gu's appeal, which meant that her response was due April 16, 2016. For "special circumstances" the Severance Plan allowed Claybaugh to extend the deadline by up to 60 days if needed to review the appeal. On April 15, 2016, the day before her response was due, Claybaugh extended the deadline by 60 days to June 15, 2016, listing the "special circumstances" as the need to obtain the recording of the CUIAB hearing and transcribe it. Defendants had known about the transcript since at least February 16 when Ms. Gu provided the transcript of Kathuria's testimony with her appeal.
22. When Claybaugh failed to produce the Benefits File, on April 21, 2016, Ms. Gu filed her complaint in this case against Claybaugh and the Severance Plan as defendants. She named Claybaugh because Claybaugh represented that she was the Claybaugh. On April 27, 2016, Ms. Gu filed the first amended complaint to add as defendants the Compensation Committee since they were also named as the administrator in the original Severance Plan. Ms. Gu found the original Severance Plan on the internet.
23. On May 18, 2016, Ms. Gu received correspondence from Defendants' new counsel. That communication and its attachments are attached to this amended complaint as Exhibit 2. In the correspondence, Defendants provided for the first time some 2015 amendments to the Severance Plan that named Naidicz as the administrator of the Severance Plan and documents in which Naidicz delegated some of his duties to Claybaugh. Defendants then threatened Rule 11 sanctions if Ms. Gu did not "immediately" dismiss the Compensation Committee. Further, Defendants claimed that Ms. Gu failed to follow the claim and appeal procedure set forth in Section 14 of the Severance Plan (the portion that deals with benefits claims) and that her filing of the first amended complaint in this case was "premature."
24. This was the first time Ms. Gu had seen the documents attached to Exhibit 2. These were exactly the documents she had requested Claybaugh provide as part of the Benefits File, and that Claybaugh failed to provide.
25. By letter dated May 26, 2016, Claybaugh denied Ms. Gu's appeal, using a different reason this time: Claybaugh claimed that Ms. Gu did not rescind her resignation within 48 hours of the 48-Hour Offer. Claybaugh claimed in the letter to attach "all other documents relied on in preparing this response." However, Claybaugh failed to provide all of the Benefits File. She failed to produce all documents relevant to Ms. Gu's claim, including communications, documents submitted by Ms. Gu, and other documents which were requested by Ms. Gu. She failed to produce any documents or ESI demonstrating any investigation other than reviewing PCYC's personnel file, the documents submitted by Ms. Gu, the transcript of the CUUAB hearing, and some internet traffic.
26. Gu realleges Paragraphs 1 through 25.
27. Claybaugh and Naidicz are the designated administrator of the Severance Plan.
28. Ms. Gu requested the Benefits File from Defendants numerous times beginning on September 17, 2015. Defendants were obligated under ERISA to produce the Benefits File and all of its contents to Ms. Gu within 30 days of Ms. Gu's September 17, 2015 request.
29. Thirty days passed and Defendants failed to provide Ms. Gu with the Benefits File. Defendants produced some of the Benefits File on May 27, 2016; however, Defendants still have not produced the complete Benefits File. Defendants did not produce all documents and ESI that "was submitted, considered, or generated in the course of making the benefit determination, without regard to whether it was relied upon in making the benefit determination." Rather, Defendants admitted that they produced only documents and ESI "relied on" in preparing Defendants' response to the appeal. Defendants withheld relevant documents and ESI that they were obligated to produce.
30. For example, Defendants did not produce any communications, not a single one, between Claybaugh and others about Ms. Gu's claim. It is inconceivable that Claybaugh investigated, analyzed, and decided Ms. Gu's claims and appeal without communicating with at least Kathuria, Controller Westermeyer, and her own HR department colleagues about what happened between July 16, 2016 and July 22, 2016 (the date HR first created any documents about Ms. Gu's termination). If she did not communicate with anyone, or failed to take notes about her communications, she violated her fiduciary duties to act solely for the purpose of providing plan benefits to the participants and to carry out her duties with the skill, prudence and diligence required of an administrator.
31. Further, Defendants failed to produce documents submitted by Ms. Gu. For example, Defendants did not produce Ms. Gu's March 3, 2016, letter providing supplemental information about her benefits claim.
32. Ms. Gu brings this claim under section 502(c) of ERISA. 29 U.S.C. § 1132(c). Section 502(g)(1) of ERISA provides the Court with discretion to award attorneys' fees and costs to Ms. Gu. 29 U.S.C. § 1132(g)(1).
Wherefore, Gu prays for judgment as set forth below.
33. Ms. Gu realleges Paragraphs 1 through 33.
34. Under the Severance Plan, Defendants were obligated to pay severance benefits to Ms. Gu. Defendants have refused to pay any benefits to Ms. Gu. The obligations of ERISA fiduciaries are set forth in Section 404(a)(1) of ERISA which provides in relevant part:
29 U.S.C. § 1104(a)(1). Defendants violated these duties and instead acted in their own self-202560.1 interest because of Claybaugh's conflicting role as PCYC's Head of Human Resources; Claybaugh failed to carry out her duties with skill, prudence and diligence; and she abused her discretion by denying Ms. Gu's claim for benefits. As PCYC's Head of Human Resources, Claybaugh acted to justify and defend her department's and PCYC's actions in terminating Ms. Gu; further, Defendants had an incentive to save PCYC $300,000. These conflicting loyalties resulted in an inadequate investigation which focused only on finding reasons to justify HR's and PCYC's claims that Ms. Gu had resigned and not been terminated. Defendants' refusal to provide the Benefits File also demonstrates their bias and desire to justify PCYC's claims rather than provide Ms. Gu benefits under the Severance Plan. Naidicz failed to supervise Claybaugh in carrying out his duties as the designated administrator of the Severance Plan. The Court should review Defendants' actions under a de novo standard or, at a minimum, adjust the sliding scale of discretion far toward Ms. Gu because of the irregularities and conflicts.
35. Defendants' bias is demonstrated by the reason Claybaugh first gave for denying Ms. Gu's claim: that at PCYC "resignations by any employees are immediately accepted upon receipt. Thus, Ms. Gu's voluntarily [sic] resignation was accepted on receipt on July 16, 2015." This reason was contradicted by the documentation generated by PCYC's (and Claybaugh's) HR department on July 22 that stated Ms. Gu's employment terminated on July 20 (not July 16). It was inconsistent with Kathuria's testimony at the CUIAB hearing, which had occurred by the time Claybaugh rejected Ms. Gu's claim. This reason was inconsistent with every document and the narrative provided by Ms. Gu with her claim, including Kathuria's July 16, 48-Hour Offer, the text exchanges Ms. Gu had with Controller Westermeyer and Kathuria on July 16, 17, 18, and 19, Kathuria's July 17 Starbucks meeting with Ms. Gu, Kathuria's July 19 telephone call with Ms. Gu, and Judge Cooke's December 8 decision that PCYC had terminated Ms. Gu.
36. Defendants arbitrarily extended their 60-day deadline for deciding Ms. Gu's appeal by claiming that they needed an additional 60 days to obtain the transcript of the November 25, 2016 CUIAB hearing, which they had known about at least as early as February 16, 2016 when Ms. Gu included Kathuria's portion of the transcript in her appeal.
37. In May, Claybaugh switched Defendants' stated reasons for denying Ms. Gu's benefits: now she admitted that PCYC had entered into a 48-Hour Agreement but claimed that Ms. Gu failed to revoke her resignation within 48 hours. The problem with Defendants' reliance on totally different grounds is that all of the information that was provided in Ms. Gu's appeal was available to Defendants when they originally denied Ms. Gu's claim. Further, the new excuse that Ms. Gu did not revoke the resignation within 48 hours fails for many reasons, including those articulated by Judge Cooke and the CUIAB in their decisions. The 48 Hour Agreement did not require Ms. Gu to formally revoke her resignation: it actually required Ms. Gu to affirmatively indicate after 48 hours that she "still want[ed] to leave" for her resignation to be effective. PCYC retained Ms. Gu as an employee through July 20: it did not terminate her on Saturday July 18, the date it now claims the 48 hours ran out. PCYC's representatives, including Kathuria and Controller Westermeyer, both communicated with Ms. Gu on July 19; neither of them told Ms. Gu that she was no longer employed. If Ms. Gu's resignation had been accepted on July 16 (or July 18 under the new claim) then, in Judge Cooke's words, they were "pulling [her] along during the weekend [by their communications which led Ms. Gu to believe she was still employed and their failure to advise her that she was no longer an employee]" Defendants did not attempt to explain why they rejected Judge Cooke's detailed recital of the testimony and documents and her conclusion and the concurring conclusion of the CUIAB. Defendants owed Ms. Gu a rational explanation for disagreeing with the two CUIAB decisions against PCYC; they did not provide it.
38. If Claybaugh interviewed Kathuria, Controller Westermeyer, HR department staff who were part of the events between July 16 and July 22, and others, she either failed to take notes of the interviews or she failed to produce her notes. If she conducted any investigation at all she either failed to record the investigation or she failed to produce her records of her investigation. As Head of Human Resources she had to know the importance of documenting personnel actions, yet she failed to document her investigation of Ms. Gu's benefits claim. As a fiduciary, Claybaugh is charged with the highest duty to Ms. Gu. The documents produced and statements by Claybaugh demonstrate that she did not do everything she could to carry out her fiduciary duties to Ms. Gu; rather, she did nothing to carry out her fiduciary duty to Ms. Gu and everything she could to justify and defend PCYC's termination of Ms. Gu. There is nothing in the Benefits File demonstrating that Claybaugh conducted any independent investigation of Ms. Gu's claim as her fiduciary.
39. Defendants' refusal to pay benefits due under the Severance Plan violates the terms of the Severance Plan and is a violation of ERISA.
40. Ms. Gu brings this claim under section 502(a)(1)(B) of ERISA. 29 U.S.C. § 502(a)(1)(B). Section 502(g)(1) of ERISA provides the Court with discretion to award attorneys' fees and costs to Ms. Gu. 29 U.S.C. § 1132(g)(1).
41. As a result of Defendants' violation of ERISA, Ms. Gu has suffered damages in an amount of at least $300,000, which will be proven at trial.
Wherefore, Gu prays for judgment as set forth below.
42. Ms. Gu realleges Paragraphs 1 through 41.
43. Section 510 of ERISA provides in pertinent part:
29 U.S.C. § 1140. Defendants violated Section 510 when they terminated Ms. Gu to avoid paying out her severance benefits.
44. Ms. Gu brings this claim under section 502(a)(1)(B) of ERISA. 29 U.S.C. § 502(a)(1)(B). Section 502(g)(1) of ERISA provides the Court with discretion to award attorneys' fees and costs to Ms. Gu. 29 U.S.C. § 1132(g)(1).
45. As a result of Defendants' violation of ERISA, Ms. Gu has suffered damages in an amount of at least $300,000, that will be proven at trial.
46. Ms. Gu brings this claim under section 502(a)(1)(B) of ERISA. 29 U.S.C. § 502(a)(1)(B). Section 502(g)(1) of ERISA provides the Court with discretion to award attorneys' fees and costs to Ms. Gu. 29 U.S.C. § 1132(g)(1).
WHEREFORE, Ms. Gu prays for judgment as set forth below.
1. For an order that Defendants provide Plaintiff Diane Gu with a complete copy of Ms. Gu's Benefits File within 14 days of the Court's order at no cost to Ms. Gu including all documents and electronically stored data ("ESI") concerning her claim including (1) any document, ESI or information that (i) was relied upon in making the benefit determination; (ii) was submitted, considered, or generated while making the benefit determination, without regard to whether it was relied upon in making the benefit determination; and (iii) demonstrates compliance with the administrative processes and safeguards required by ERISA and the Department of Labor; the plan documents, ESI; (2) information including the plan, the summary plan description, any internal rule, guideline, protocol, or procedure concerning the analysis and determination of claims including Ms. Gu's claim, the claims review process and any appeal procedures. ESI includes voicemails, emails, texts, instant messages, calendars, and any other data concerning Ms. Gu's claims, the process, or internal rules, guidelines, protocols, or procedures; and (3) all communications Defendants had with anyone concerning Ms. Gu or her benefits claim, including counsel;
2. For compensatory damages in excess of $300,000, according to proof;
3. For reinstatement, back pay, and restitution of all benefits including equity payouts that Defendants precluded Ms. Gu from obtaining through termination of Ms. Gu to avoid paying her benefits under the Severance Plan in an amount in excess of $300,000;
4. For penalties of $110 per day from October 17, 2015 (30 days after Ms. Gu's September 17, 2015 request for the Benefits File) through the date Defendants produce the entire Benefits File under 29 U.S.C. § 1132 (c)(1) and 29 C.F.R. § 2575.502c-1;
5. For costs of suit;
6. For attorneys' fees;
7. For interest;
8. For a declaration that Ms. Gu is entitled to severance benefits under the Severance Plan; and
9. For any other relief the Court deems proper.
