Gu v. Claybaugh et al

Filing 17

ORDER AS MODIFIED GRANTING STIPULATION to Authorize Filing of Second Amended Complaint to Add Defendants, Dismiss Defendants, and Add Facts and Claims for Relief 16 . Ms. Gu shall file her second amended complaint within three days of thi s order. Any new defendants must file a consent/declination within 30 days. Case Management Conference set for 9/21/2016 10:00 AM in Courtroom 7, 4th Floor, San Jose. Signed by Judge Nathanael Cousins on 7/22/2016. (lmh, COURT STAFF) (Filed on 7/22/2016)

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W. George Wailes (SBN 100435)
Kevin B. Jackson (SBN 300193)
AARON, RIECHERT, CARPOL & RIFFLE, APC
900 Veterans Blvd., Suite 600
Redwood City, CA 94063
Telephone:
[phone]
Facsimile:
[phone]
Email:
[e-mail]

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Attorneys for Plaintiff, Diane B. Gu
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A ARON , R IECHERT , CARPOL & RIFFLE , APC
900 V ETERANS B LVD ., S UITE 600, R EDWOOD C ITY , CA 94063

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Rick Bergstrom (State Bar No. 169594)
JONES DAY
12265 El Camino Real, Suite 300
San Diego, CA 92130
Telephone:
[phone]
Facsimile:
[phone]
Email:
[e-mail]

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Attorneys for Defendant
Pharmacyclics, Inc.

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

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DIANE B. GU,
Plaintiff,

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v.

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NANCY CLAYBAUGH,
EDWARD M. LIDDY,
ROXANNE S. AUSTIN,
GLENN F. TILTON,
FREDERICK H. WADDELL, AND
PHARMACYCLICS, INC.,
ADMINISTRATORS OF THE
PHARMACYCLICS, INC. CHANGE IN
CONTROL AND SEVERANCE PLAN

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Case No.: 5:16-cv-02106
STIPULATION AND ORDER TO
AUTHORIZE FILING OF SECOND
AMENDED COMPLAINT TO ADD
DEFENDANTS, DISMISS DEFENDANTS,
AND ADD FACTS AND CLAIMS FOR
RELIEF ; AS MODIFIED

Defendants.

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IT IS STIPULATED by the parties through their attorneys of record that Plaintiff

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Diane B. Gu may file the second amended complaint which is attached to this stipulation

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(without its two exhibits). Defendants consent to Plaintiff’s request to amend her first

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amended complaint to dismiss the following defendants:
203532.1

STIPULATION AND ORDER TO FILE SECOND AMENDED COMPLAINT NO. 5:16-CV-02106 NC

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Edward M. Liddy;

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2.

Roxanne S. Austin;

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3.

Glenn F. Tilton; and

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4.

Frederick H. Waddell;

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To add the following defendants:

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1.

Mark Naidicz; and

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A ARON , R IECHERT , CARPOL & RIFFLE , APC
900 V ETERANS B LVD ., S UITE 600, R EDWOOD C ITY , CA 94063

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Pharmacyclics, LLC; and

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To add the following claims and the additional facts to support them:

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1.

Second Claim for Relief for ERISA Benefits; and

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2.

Third Claim for Relief for Violation of ERISA: Termination to Avoid Paying

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Benefits. The parties agree that Defendants’ response shall be due August 29, 2016.

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As a result of this amendment, the parties also request that the Court continue the

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initial case management conference in this case to any date convenient for the Court after

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September 19, 2016, and extend the parties’ deadlines to comply with Rule 26 and the

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Court’s Civil Local Rules including 3.5, 16-9, and 16-10 concurrently with the continuance

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of the case management conference to enable the parties to finalize the pleadings, continue

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settlement discussions, and meet and confer on the Rule 26 issues.
It is so stipulated.

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Dated:

July 15, 2016

AARON, RIECHERT, CARPOL & RIFFLE, APC

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By: /s/ W. George Wailes
W. George Wailes/Kevin B. Jackson
Attorneys for Plaintiff, Diane B. Gu

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Dated:

July 15, 2016

JONES DAY

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By: /s/ Rick Bergstrom
Rick Bergstrom
Attorneys for Defendant
Pharmacyclics, Inc.

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203532.1

1

STIPULATION AND ORDER TO FILE SECOND AMENDED COMPLAINT NO. 5:16-CV-02106 NC

ORDER

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Based on the parties’ stipulation, IT IS ORDERED that Ms. Gu shall file her second
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amended complaint which is attached to this stipulation and order within ten days of this

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order. Ms. Gu shall attach Exhibits 1 and 2 with the second amended complaint filed with the

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Court. Defendants shall file their responsive pleading by August 29, 2016.

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The initial case management conference in this case is continued until 10:00 a.m. on

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September 21
____________________, 2016. The deadlines for the pre-conference items listed in the

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Order Setting Initial Case Management Conference and ADR Deadlines are continued

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concurrently with this order. Any new defendants must file a consent or declination within
30 days.
July 22, 2016
Dated:__________________________

RT
U
O

S DISTRICT
TE
C
TA
___________________________________

S

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UNIT
ED

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United States District Magistrate Judge

RT

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ER

Cousins

H

17

.
thanael M
Judge Na

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R NIA

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FO

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DERED
SO OR
IT IS
DIFIED
AS MO

LI

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A

10

NO

A ARON , R IECHERT , CARPOL & RIFFLE , APC
900 V ETERANS B LVD ., S UITE 600, R EDWOOD C ITY , CA 94063

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N

D IS T IC T
R

OF

C

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203532.1

2

STIPULATION AND ORDER TO FILE SECOND AMENDED COMPLAINT NO. 5:16-CV-02106 NC

EXHIBIT 1

EXHIBIT 1

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W. George Wailes (SBN 100435)
Kevin Bryce Jackson (SBN 300193)
AARON, RIECHERT, CARPOL & RIFFLE, APC
900 Veterans Blvd., Suite 600
Redwood City, CA 94063
Telephone:
[phone]
Facsimile: [phone]
Email:
[e-mail]

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Attorneys for Plaintiff, Diane B. Gu
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A ARON , R IECHERT , CARPOL & RIFFLE , APC
900 V ETERANS B LVD ., S UITE 600, R EDWOOD C ITY , CA 94063

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

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DIANE B. GU,

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Case No.:

Plaintiff,

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v.

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NANCY CLAYBAUGH,
MARK NAIDICZ, AND
PHARMACYCLICS, LLC,
FIDUCIARIES OF THE
PHARMACYCLICS, INC. CHANGE IN
CONTROL AND SEVERANCE PLAN,
PHARMACYCLICS, INC.,

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16-CV-02106 NC

SECOND AMENDED COMPLAINT FOR
VIOLATION OF ERISA AND BREACH OF
CONTRACT
(29 U.S.C. §1132, 1140, 29 C.F.R.
§2575.502c-1)

Defendants.

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16

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Plaintiff, Diane B. Gu, alleges as follows:

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I.

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1.

INTRODUCTION

This action is brought on behalf of Diane B. Gu under the Employee

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Retirement Income Security Act of 1974, 29 U.S.C. 1001, et seq. (“ERISA”). Ms. Gu seeks

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to recover benefits due and enforce her rights under the terms of the Pharmacyclics, Inc.

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Change in Control and Severance Plan (the “Severance Plan”), reinstatement and restitution

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including back pay and lost benefits, and to obtain equitable and statutory relief for to the

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administrator’s failure to comply with the terms of the Severance Plan and ERISA. Ms. Gu

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seeks a determination that she is entitled to the administrator’s benefits file, statutory
202560.1

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SECOND AMENDED COMPLAINT NO. 5:16-CV-02106 NC

1

penalties for the administrator’s refusal to provide the file, reinstatement and back pay and

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lost benefits, and/or severance benefits under the Severance Plan and ERISA as a result of

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Pharmacyclics’ termination of her employment, and her attorneys’ fees and costs.

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II.
2.

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A ARON , R IECHERT , CARPOL & RIFFLE , APC
900 V ETERANS B LVD ., S UITE 600, R EDWOOD C ITY , CA 94063

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.

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Venue is proper in this District Court under Section 1132(e)(2) of Title 29 of

the United States Code.

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III.
4.

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JURISDICTION AND VENUE

THE PARTIES

Plaintiff Diane B. Gu (“Ms. Gu”) is an individual residing in Santa Clara

County in California. References to Ms. Gu include her agents.
5.

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Defendant Pharmacyclics, LLC is a wholly-owned subsidiary of AbbVie Inc.

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(“AbbVie”) and successor-in-interest to Defendant Pharmacyclics, Inc., the plan sponsor and

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original administrator of the Severance Plan. The two Pharmacyclics defendants will be

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jointly referred to as PCYC unless otherwise noted.
6.

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Defendant Mark Naidicz (“Naidicz”) served at all times relevant to this

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complaint as the Vice President of Business Human Resources for AbbVie. Naidicz is named

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as the administrator of the Severance Plan under an amendment to the Severance Plan.
7.

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Defendant Nancy Claybaugh (“Claybaugh”) served at all times relevant to this

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complaint as the Head of Human Resources for PCYC. Naidicz delegated some of his

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responsibilities and authority as administrator under the Severance Plan, including over Ms.

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Gu’s claims for benefits, to Claybaugh, who administers the Severance Plan from PCYC’s

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corporate offices in Sunnyvale, California.

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IV.
8.

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GENERAL ALLEGATIONS

Ms. Gu was employed by PCYC as a Senior Manager of Corporate Planning

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Financial Planning and Analysis. Senior Finance Director Dilip Kathuria (“Kathuria”) hired

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Ms. Gu and was her supervisor during her tenure at PCYC.
9.

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202560.1

On Thursday, July 16, 2015, Ms. Gu resigned in the heat of the moment
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SECOND AMENDED COMPLAINT NO. 5:16-CV-02106 NC

during a confrontation with Kathuria which humiliated her. Kathuria immediately texted Ms.

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Gu: “[h]i Diane… take some time… if after 48 hours you still want to leave I will accept”

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(“48-Hour Offer”). Ms. Gu responded by text, saying, “[o]k . . . we should talk . . .” This

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exchange created an agreement between PCYC and Ms. Gu that Ms. Gu would continue as a

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PCYC employee while she reconsidered her resignation and, if Ms. Gu informed Kathuria

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after 48 hours that she still wanted to resign, then her resignation would be effective when

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A ARON , R IECHERT , CARPOL & RIFFLE , APC
900 V ETERANS B LVD ., S UITE 600, R EDWOOD C ITY , CA 94063

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she informed Kathuria. If Ms. Gu did not confirm that she still wanted to resign, she would

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continue as an employee (the “48-Hour Agreement”). The facts of this exchange and what

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followed are set forth in the Declaration of Diane Gu Under Penalty of Perjury in Support of

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Claim for Benefits (which was provided to Defendants on February 16, 2016, with Ms. Gu’s

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appeal from the denial of her benefits claim) which is attached as Exhibit 1.
10.

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After reaching the 48-Hour Agreement, Kathuria asked to meet, and met, with

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Ms. Gu on Friday, July 17, at a Starbucks restaurant for 1½ hours, exchanged texts with her

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on July 16, 17, 18, and 19 about work issues and ideas, and called her on Sunday July 19.

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Ms. Gu made written statements within 48 hours of the 48-hour Offer that indicated her

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desire to continue working, including (1) on July 17 requesting that PCYC restore her

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employee email account; and (2) on July 18 promising not to leave in the heat of the

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moment. Despite Kathuria’s assurance during the July 19 telephone call that he was going to

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ask HR to withdraw her resignation, on July 20 Kathuria told Ms. Gu that he was “accepting”

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her resignation. PCYC’s first written notification to Ms. Gu of the termination of her

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employment was by document dated July 22, 2015, which listed July 20, 2015, as the date of

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termination.
11.

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Pharmacyclics, Inc. was named as administrator in the original Severance

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Plan. The Severance Plan also originally provided that Pharmacyclics, Inc. would act as

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administrator through its Compensation Committee. Edward M. Liddy, Roxanne S. Austin,

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Glenn F. Tilton and Frederick H. Waddell comprise the Compensation Committee

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(collectively the “Compensation Committee”).
12.

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202560.1

The Severance Plan contains Section 25 entitled “Statement of ERISA
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SECOND AMENDED COMPLAINT NO. 5:16-CV-02106 NC

1

Rights:” which includes this language:

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Under ERISA, there are steps you can take to enforce the
above rights. For example, if you request materials and do not
receive them within 30 days, you may file suit in a federal
court. In such a case, the court may require the Claybaugh to
provide the materials and to pay you up to $110 a day until you
receive the materials, unless the materials were not sent due to
reasons beyond the control of the Claybaugh. If you have a
claim which is denied or ignored, in whole or in part, you may
file suit in a federal court. If it should happen that you are
discriminated against for asserting your rights, you may seek
assistance from the U.S. Department of Labor, or you may file
suit in a federal court.

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A ARON , R IECHERT , CARPOL & RIFFLE , APC
900 V ETERANS B LVD ., S UITE 600, R EDWOOD C ITY , CA 94063

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13.

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The Severance Plan contains Section 2.7 entitled “Involuntary Termination”

which includes this language:

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“Involuntary Termination” means (a) a termination of active
employment with the Company or any Subsidiary or Affiliate
of the Company for any reason other than by reason of an
Eligible Employee’s retirement . . . voluntary resignation,
death or Disability, or a termination for Cause.

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Ms. Gu did not voluntarily resign as she complied with the terms of the 48-Hour Agreement

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and let Kathuria know that she wanted to continue as an employee both within 48 actual

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hours and before PCYC terminated her on July 20, 2015.

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14.

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On September 17, 2015, Ms. Gu submitted a claim for benefits under the

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Severance Plan to Defendants. In her claim, Ms. Gu also asked for a copy of her benefits file,

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including all documents concerning her termination from PCYC including texts, emails,

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electronically stored documents (ESI) and all other documents (the “Benefits File”). When

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Claybaugh failed to provide the Benefits File, on November 24, 2015, Ms. Gu’s counsel sent

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another letter requesting the Benefits File, specifying the documents and ESI requested:

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all documents and electronically stored data (“ESI”)
concerning her claim including any document, ESI or
information that (i) was relied upon in making the benefit
determination; (ii) 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; and (iii) demonstrates compliance with the
administrative processes and safeguards required by ERISA
and the Department of Labor. She also requests copies of all of
the plan documents, ESI and information including the plan,
the summary plan description, any internal rule, guideline,

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202560.1

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SECOND AMENDED COMPLAINT NO. 5:16-CV-02106 NC

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.

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Claybaugh again failed to provide the Benefits File.

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A ARON , R IECHERT , CARPOL & RIFFLE , APC
900 V ETERANS B LVD ., S UITE 600, R EDWOOD C ITY , CA 94063

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15.

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.

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Also on November 25, 2015, Administrative Law Judge Pamela Cooke of the

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:

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What is unequivocal is that the employer paid the claimant
through the Monday, without being required to pay the
claimant. The other unequivocal fact is that the employer asked
the claimant to "take some time . . . if after 48 hours you want
to leave I will accept" was believed to mischaracterized by the
employer and with the employer making a self-serving interests
about the interpretation of that statement. Overall, the
statements of the claimant are believed over that of the
employer given the actions and communication by the
employer and the inconsistencies, especially in light of
interpreting the July 16, 12:38 p.m. e-mail and paying the
claimant through Monday and having continuing text message
conversations and in face-to-face meeting with the claimant on
the Friday is inconsistent with the employer's position and
testimony.

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202560.1

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SECOND AMENDED COMPLAINT NO. 5:16-CV-02106 NC

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(emphasis added). Judge Cooke explained why she determined that the “moving party” was

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PCYC and not Ms. Gu:

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In the present case, the employer did not change its position
and also by sending the text message asking the claimant to
consider during the next 48 hours, gave the claimant every
indication that the employer was declining the resignation and
requesting the claimant to reconsider. The employer also paid
the claimant through the Monday, indicating that the claimant
was an employee until Monday morning. Under the
circumstances, there was no clear and unequivocal resignation
and by the employer paying the claimant through Monday and
pulling the claimant along during the weekend, the employer is
the moving party.

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A ARON , R IECHERT , CARPOL & RIFFLE , APC
900 V ETERANS B LVD ., S UITE 600, R EDWOOD C ITY , CA 94063

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(emphasis added). Finally Judge Cooke rendered her holding:

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In the present case, the employer was not willing to allow the
claimant to continue working on the Monday and thereafter,
after the claimant had rescinded her resignation. This
constitutes a failure to establish a voluntary quit or misconduct
by the claimant.

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PCYC appealed the decision.
17.

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On December 18, 2015, Claybaugh denied Ms. Gu’s benefits claim, stating

that Ms. Gu voluntarily resigned:

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As unequivocally stated in the Plan, any employee who
voluntarily resigns for [sic] his/her position is not eligible to
receive severance benefits. As an "at- will" employee, Ms. Gu
had the ability to end her employment relationship with
Pharmacyclics at any time, and on July 16, 2015, Ms. Gu did
so when she voluntarily resigned from her position by emailing
her manager, Mr. Dilip Kathuria her resignation and walking
out on her job the same day. In addition, contrary to your letter,
at no time did Mr. Kathuria ever state that he would withdraw
Ms. Gu's resignation or give her any further time to reconsider,
nor did Mr. Kathuria have the authority to do so. At
Pharmacyclics, resignations by any employees are immediately
accepted upon receipt. Thus, Ms. Gu's voluntarily resignation
was accepted upon receipt on July 16, 2015.

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(emphasis added). In making this decision, Claybaugh ignored all of the facts submitted by

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Ms. Gu including Kathuria’s written 48-Hour Offer, the text exchanges Ms. Gu had with

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Controller Westermeyer and Kathuria on July 16, 17, 18, and 19, Kathuria’s July 17

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Starbucks meeting with Ms. Gu, and his July 19 telephone call with Ms. Gu. Claybaugh

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ignored Judge Cooke’s December 8 decision that PCYC had terminated Ms. Gu, not even
202560.1

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SECOND AMENDED COMPLAINT NO. 5:16-CV-02106 NC

1

mentioning it in her denial. Claybaugh’s decision was inconsistent with all of the evidence.

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And Claybaugh again failed to deliver the Benefits File.
18.

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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

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Cooke’s decision, the text communications between Kathuria, PCYC’s Controller

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Christopher Westermeyer, and Ms. Gu, and Ms. Gu’s declaration under penalty of perjury

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A ARON , R IECHERT , CARPOL & RIFFLE , APC
900 V ETERANS B LVD ., S UITE 600, R EDWOOD C ITY , CA 94063

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(Ex. 1). She informed Claybaugh that her preparation of the appeal had been hampered by

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the lack of the Benefits File. Still Claybaugh did not provide the Benefits File.
19.

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On February 25, 2016, the CUIAB issued its decision affirming Judge

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Cooke’s ruling that PCYC terminated Ms. Gu. The Board reviewed the facts and agreed with

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Judge Cooke that, after Diane resigned, PCYC asked Diane to reconsider, giving her 48

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hours; PCYC continued to have discussions with Diane that were “reasonably understood to

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be regarding whether she would return to work;” and that PCYC “essentially did not accept

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the claimant’s resignation, and it was withdrawn prior to the employer deciding to accept her

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resignation.” Then the Board issued its holding:

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In this case, the claimant reasonably understood she was
discharged for walking out of a meeting where she was upset
due to the employer’s allegations concerning the disclosure of
facts. The claimant left work in the heat of the moment. There
are no prior warnings in the record. As this is an isolated
instance of poor judgment, the claimant was discharged for
reasons other than misconduct under [California
Unemployment Insurance Code] section 1256. 1

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20.

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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.

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Under the Severance Plan Claybaugh had 60 days to decide Ms. Gu’s appeal,

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which meant that her response was due April 16, 2016. For “special circumstances” the

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Severance Plan allowed Claybaugh to extend the deadline by up to 60 days if needed to

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California Unemployment Insurance Code Section 1256 provides, in relevant part: “An
individual is disqualified for unemployment compensation benefits if the director finds that
he or she left his or her most recent work voluntarily without good cause or that he or she has
been discharged for misconduct connected with his or her most recent work.”
202560.1
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SECOND AMENDED COMPLAINT NO. 5:16-CV-02106 NC

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review the appeal. On April 15, 2016, the day before her response was due, Claybaugh

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extended the deadline by 60 days to June 15, 2016, listing the “special circumstances” as the

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need to obtain the recording of the CUIAB hearing and transcribe it. Defendants had known

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about the transcript since at least February 16 when Ms. Gu provided the transcript of

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Kathuria’s testimony with her appeal.
22.

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When Claybaugh failed to produce the Benefits File, on April 21, 2016, Ms.

A ARON , R IECHERT , CARPOL & RIFFLE , APC
900 V ETERANS B LVD ., S UITE 600, R EDWOOD C ITY , CA 94063

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Gu filed her complaint in this case against Claybaugh and the Severance Plan as defendants.

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She named Claybaugh because Claybaugh represented that she was the Claybaugh. On April

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27, 2016, Ms. Gu filed the first amended complaint to add as defendants the Compensation

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Committee since they were also named as the administrator in the original Severance Plan.

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Ms. Gu found the original Severance Plan on the internet.
23.

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On May 18, 2016, Ms. Gu received correspondence from Defendants’ new

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counsel. That communication and its attachments are attached to this amended complaint as

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Exhibit 2. In the correspondence, Defendants provided for the first time some 2015

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amendments to the Severance Plan that named Naidicz as the administrator of the Severance

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Plan and documents in which Naidicz delegated some of his duties to Claybaugh. Defendants

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then threatened Rule 11 sanctions if Ms. Gu did not “immediately” dismiss the

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Compensation Committee. Further, Defendants claimed that Ms. Gu failed to follow the

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claim and appeal procedure set forth in Section 14 of the Severance Plan (the portion that

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deals with benefits claims) and that her filing of the first amended complaint in this case was

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“premature.”
24.

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This was the first time Ms. Gu had seen the documents attached to Exhibit 2.

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These were exactly the documents she had requested Claybaugh provide as part of the

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Benefits File, and that Claybaugh failed to provide.
25.

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By letter dated May 26, 2016, Claybaugh denied Ms. Gu’s appeal, using a

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different reason this time: Claybaugh claimed that Ms. Gu did not rescind her resignation

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within 48 hours of the 48-Hour Offer. Claybaugh claimed in the letter to attach “all other

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documents relied on in preparing this response.” However, Claybaugh failed to provide all of
202560.1

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SECOND AMENDED COMPLAINT NO. 5:16-CV-02106 NC

1

the Benefits File. She failed to produce all documents relevant to Ms. Gu’s claim, including

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communications, documents submitted by Ms. Gu, and other documents which were

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requested by Ms. Gu. She failed to produce any documents or ESI demonstrating any

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investigation other than reviewing PCYC’s personnel file, the documents submitted by Ms.

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Gu, the transcript of the CUUAB hearing, and some internet traffic.

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FIRST CLAIM FOR RELIEF
FAILURE TO PRODUCE BENEFITS FILE AND FOR PENALTIES
[29 U.S.C. §1132 (c)(1); 29 C.F.R. §2575.502c-1]

A ARON , R IECHERT , CARPOL & RIFFLE , APC
900 V ETERANS B LVD ., S UITE 600, R EDWOOD C ITY , CA 94063

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26.

Gu realleges Paragraphs 1 through 25.

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27.

Claybaugh and Naidicz are the designated administrator of the Severance

28.

Ms. Gu requested the Benefits File from Defendants numerous times

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Plan.

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beginning on September 17, 2015. Defendants were obligated under ERISA to produce the

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Benefits File and all of its contents to Ms. Gu within 30 days of Ms. Gu’s September 17,

14

2015 request.
29.

15

Thirty days passed and Defendants failed to provide Ms. Gu with the Benefits

16

File. Defendants produced some of the Benefits File on May 27, 2016; however, Defendants

17

still have not produced the complete Benefits File. Defendants did not produce all documents

18

and ESI that “was submitted, considered, or generated in the course of making the benefit

19

determination, without regard to whether it was relied upon in making the benefit

20

determination.” Rather, Defendants admitted that they produced only documents and ESI

21

“relied on” in preparing Defendants’ response to the appeal. Defendants withheld relevant

22

documents and ESI that they were obligated to produce.
30.

23

For example, Defendants did not produce any communications, not a single

24

one, between Claybaugh and others about Ms. Gu’s claim. It is inconceivable that Claybaugh

25

investigated, analyzed, and decided Ms. Gu’s claims and appeal without communicating with

26

at least Kathuria, Controller Westermeyer, and her own HR department colleagues about

27

what happened between July 16, 2016 and July 22, 2016 (the date HR first created any

28

documents about Ms. Gu’s termination). If she did not communicate with anyone, or failed
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SECOND AMENDED COMPLAINT NO. 5:16-CV-02106 NC

1

to take notes about her communications, she violated her fiduciary duties to act solely for the

2

purpose of providing plan benefits to the participants and to carry out her duties with the

3

skill, prudence and diligence required of an administrator.
31.

4

Further, Defendants failed to produce documents submitted by Ms. Gu. For

5

example, Defendants did not produce Ms. Gu’s March 3, 2016, letter providing supplemental

6

information about her benefits claim.
32.

A ARON , R IECHERT , CARPOL & RIFFLE , APC
900 V ETERANS B LVD ., S UITE 600, R EDWOOD C ITY , CA 94063

7

Ms. Gu brings this claim under section 502(c) of ERISA. 29 U.S.C. § 1132(c).

8

Section 502(g)(1) of ERISA provides the Court with discretion to award attorneys’ fees and

9

costs to Ms. Gu. 29 U.S.C. § 1132(g)(1).
Wherefore, Gu prays for judgment as set forth below.

10
11

SECOND CLAIM FOR RELIEF
FOR ERISA BENEFITS

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13

33.

Ms. Gu realleges Paragraphs 1 through 33.

14

34.

Under the Severance Plan, Defendants were obligated to pay severance

15

benefits to Ms. Gu. Defendants have refused to pay any benefits to Ms. Gu. The obligations

16

of ERISA fiduciaries are set forth in Section 404(a)(1) of ERISA which provides in relevant

17

part:

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A fiduciary shall discharge his duties with respect to a Plan
solely in the interest of the participants and beneficiaries and

19

(A)

20

for the exclusive purpose of:

(i.)
providing benefits to participants and their
beneficiaries . . .

21
22

¶

23

(B) with the care, skill, prudence, and diligence under the
circumstances then prevailing that a prudent man acting in a
like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like aims;

24
25

27

(D) in accordance with the documents and instruments
governing the Plan insofar as such documents and instruments
are consistent with the provisions of this subchapter and
subchapter III of this chapter.

28

29 U.S.C. § 1104(a)(1). Defendants violated these duties and instead acted in their own self-

26

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SECOND AMENDED COMPLAINT NO. 5:16-CV-02106 NC

interest because of Claybaugh’s conflicting role as PCYC’s Head of Human Resources;

2

Claybaugh failed to carry out her duties with skill, prudence and diligence; and she abused

3

her discretion by denying Ms. Gu’s claim for benefits. As PCYC’s Head of Human

4

Resources, Claybaugh acted to justify and defend her department’s and PCYC’s actions in

5

terminating Ms. Gu; further, Defendants had an incentive to save PCYC $300,000. These

6

conflicting loyalties resulted in an inadequate investigation which focused only on finding

7
A ARON , R IECHERT , CARPOL & RIFFLE , APC
900 V ETERANS B LVD ., S UITE 600, R EDWOOD C ITY , CA 94063

1

reasons to justify HR’s and PCYC’s claims that Ms. Gu had resigned and not been

8

terminated. Defendants’ refusal to provide the Benefits File also demonstrates their bias and

9

desire to justify PCYC’s claims rather than provide Ms. Gu benefits under the Severance

10

Plan. Naidicz failed to supervise Claybaugh in carrying out his duties as the designated

11

administrator of the Severance Plan. The Court should review Defendants’ actions under a de

12

novo standard or, at a minimum, adjust the sliding scale of discretion far toward Ms. Gu

13

because of the irregularities and conflicts.
35.

14

Defendants’ bias is demonstrated by the reason Claybaugh first gave for

15

denying Ms. Gu’s claim: that at PCYC “resignations by any employees are immediately

16

accepted upon receipt. Thus, Ms. Gu’s voluntarily [sic] resignation was accepted on receipt

17

on July 16, 2015.” This reason was contradicted by the documentation generated by PCYC’s

18

(and Claybaugh’s) HR department on July 22 that stated Ms. Gu’s employment terminated

19

on July 20 (not July 16). It was inconsistent with Kathuria’s testimony at the CUIAB

20

hearing, which had occurred by the time Claybaugh rejected Ms. Gu’s claim. This reason

21

was inconsistent with every document and the narrative provided by Ms. Gu with her claim,

22

including Kathuria’s July 16 48-Hour Offer, the text exchanges Ms. Gu had with Controller

23

Westermeyer and Kathuria on July 16, 17, 18, and 19, Kathuria’s July 17 Starbucks meeting

24

with Ms. Gu, Kathuria’s July 19 telephone call with Ms. Gu, and Judge Cooke’s December 8

25

decision that PCYC had terminated Ms. Gu.
36.

26

Defendants arbitrarily extended their 60-day deadline for deciding Ms. Gu’s

27

appeal by claiming that they needed an additional 60 days to obtain the transcript of the

28

November 25, 2016 CUIAB hearing, which they had known about at least as early as
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SECOND AMENDED COMPLAINT NO. 5:16-CV-02106 NC

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February 16, 2016 when Ms. Gu included Kathuria’s portion of the transcript in her appeal.
37.

2

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

4

that Ms. Gu failed to revoke her resignation within 48 hours. The problem with Defendants’

5

reliance on totally different grounds is that all of the information that was provided in Ms.

6

Gu’s appeal was available to Defendants when they originally denied Ms. Gu’s claim.

7
A ARON , R IECHERT , CARPOL & RIFFLE , APC
900 V ETERANS B LVD ., S UITE 600, R EDWOOD C ITY , CA 94063

3

Further, the new excuse that Ms. Gu did not revoke the resignation within 48 hours fails for

8

many reasons, including those articulated by Judge Cooke and the CUIAB in their decisions.

9

The 48 Hour Agreement did not require Ms. Gu to formally revoke her resignation: it

10

actually required Ms. Gu to affirmatively indicate after 48 hours that she “still want[ed] to

11

leave” for her resignation to be effective. PCYC retained Ms. Gu as an employee through

12

July 20: it did not terminate her on Saturday July 18, the date it now claims the 48 hours ran

13

out. PCYC’s representatives, including Kathuria and Controller Westermeyer, both

14

communicated with Ms. Gu on July 19; neither of them told Ms. Gu that she was no longer

15

employed. If Ms. Gu’s resignation had been accepted on July 16 (or July 18 under the new

16

claim) then, in Judge Cooke’s words, they were “pulling [her] along during the weekend [by

17

their communications which led Ms. Gu to believe she was still employed and their failure to

18

advise her that she was no longer an employee]” Defendants did not attempt to explain why

19

they rejected Judge Cooke’s detailed recital of the testimony and documents and her

20

conclusion and the concurring conclusion of the CUIAB. Defendants owed Ms. Gu a rational

21

explanation for disagreeing with the two CUIAB decisions against PCYC; they did not

22

provide it.

23

38.

If Claybaugh interviewed Kathuria, Controller Westermeyer, HR department

24

staff who were part of the events between July 16 and July 22, and others, she either failed to

25

take notes of the interviews or she failed to produce her notes. If she conducted any

26

investigation at all she either failed to record the investigation or she failed to produce her

27

records of her investigation. As Head of Human Resources she had to know the importance

28

of documenting personnel actions, yet she failed to document her investigation of Ms. Gu’s
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SECOND AMENDED COMPLAINT NO. 5:16-CV-02106 NC

1

benefits claim. As a fiduciary, Claybaugh is charged with the highest duty to Ms. Gu. The

2

documents produced and statements by Claybaugh demonstrate that she did not do

3

everything she could to carry out her fiduciary duties to Ms. Gu; rather, she did nothing to

4

carry out her fiduciary duty to Ms. Gu and everything she could to justify and defend

5

PCYC’s termination of Ms. Gu. There is nothing in the Benefits File demonstrating that

6

Claybaugh conducted any independent investigation of Ms. Gu’s claim as her fiduciary.

A ARON , R IECHERT , CARPOL & RIFFLE , APC
900 V ETERANS B LVD ., S UITE 600, R EDWOOD C ITY , CA 94063

7
8
9

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. §

10

502(a)(1)(B). Section 502(g)(1) of ERISA provides the Court with discretion to award

11

attorneys’ fees and costs to Ms. Gu. 29 U.S.C. § 1132(g)(1).

12
13

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.

14

Wherefore, Gu prays for judgment as set forth below.

15

THIRD CLAIM FOR RELIEF
VIOLATION OF ERISA: TERMINATION TO AVOID PAYING BENEFITS

16
17

42.

Ms. Gu realleges Paragraphs 1 through 41.

18

43.

Section 510 of ERISA provides in pertinent part:

19

It shall be unlawful for any person to discharge, fine, suspend,
expel, discipline, or discriminate against a participant or
beneficiary for exercising any right to which he is entitled
under the provisions of an employee benefit plan, this
subchapter, section 1201 of this title, or the Welfare and
Pension Plans Disclosure Act [29 U.S.C. 301 et seq.], or for the
purpose of interfering with the attainment of any right to which
such participant may become entitled under the plan, this
subchapter, or the Welfare and Pension Plans Disclosure Act.

20
21
22
23
24

29 U.S.C. § 1140. Defendants violated Section 510 when they terminated Ms. Gu to avoid

25

paying out her severance benefits.

26

44.

Ms. Gu brings this claim under section 502(a)(1)(B) of ERISA. 29 U.S.C. §

27

502(a)(1)(B). Section 502(g)(1) of ERISA provides the Court with discretion to award

28

attorneys’ fees and costs to Ms. Gu. 29 U.S.C. § 1132(g)(1).
202560.1
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SECOND AMENDED COMPLAINT NO. 5:16-CV-02106 NC

45.

1
2

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.

3

Ms. Gu brings this claim under section 502(a)(1)(B) of ERISA. 29 U.S.C. §

4

502(a)(1)(B). Section 502(g)(1) of ERISA provides the Court with discretion to award

5

attorneys’ fees and costs to Ms. Gu. 29 U.S.C. § 1132(g)(1).
WHEREFORE, Ms. Gu prays for judgment as set forth below.

6

PRAYER FOR RELIEF

A ARON , R IECHERT , CARPOL & RIFFLE , APC
900 V ETERANS B LVD ., S UITE 600, R EDWOOD C ITY , CA 94063

7
1.

8

For an order that Defendants provide Plaintiff Diane Gu with a complete copy

9

of Ms. Gu’s Benefits File within 14 days of the Court’s order at no cost to Ms. Gu including

10

all documents and electronically stored data (“ESI”) concerning her claim including (1) any

11

document, ESI or information that (i) was relied upon in making the benefit determination;

12

(ii) was submitted, considered, or generated while making the benefit determination, without

13

regard to whether it was relied upon in making the benefit determination; and (iii)

14

demonstrates compliance with the administrative processes and safeguards required by

15

ERISA and the Department of Labor; the plan documents, ESI; (2) information including the

16

plan, the summary plan description, any internal rule, guideline, protocol, or procedure

17

concerning the analysis and determination of claims including Ms. Gu’s claim, the claims

18

review process and any appeal procedures. ESI includes voicemails, emails, texts, instant

19

messages, calendars, and any other data concerning Ms. Gu’s claims, the process, or internal

20

rules, guidelines, protocols, or procedures; and (3) all communications Defendants had with

21

anyone concerning Ms. Gu or her benefits claim, including counsel;

22

2.

For compensatory damages in excess of $300,000, according to proof;

23

3.

For reinstatement, back pay, and restitution of all benefits including equity

24

payouts that Defendants precluded Ms. Gu from obtaining through termination of Ms. Gu to

25

avoid paying her benefits under the Severance Plan in an amount in excess of $300,000;
4.

26

For penalties of $110 per day from October 17, 2015 (30 days after Ms. Gu’s

27

September 17, 2015 request for the Benefits File) through the date Defendants produce the

28

entire Benefits File under 29 U.S.C. §1132 (c) (1) and 29 C.F.R. §2575.502c-1;
202560.1

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SECOND AMENDED COMPLAINT NO. 5:16-CV-02106 NC

1

5.

For costs of suit;

2

6.

For attorneys’ fees;

3

7.

For interest;

4

8.

For a declaration that Ms. Gu is entitled to severance benefits under the

5

Severance Plan; and
9.

6

For any other relief the Court deems proper.

A ARON , R IECHERT , CARPOL & RIFFLE , APC
900 V ETERANS B LVD ., S UITE 600, R EDWOOD C ITY , CA 94063

7
8

Respectfully submitted,
Dated: July __, 2016

9
10

AARON, RIECHERT, CARPOL
& RIFFLE, APC
By:
W. George Wailes
Attorneys for Plaintiff, Diane B. Gu

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SECOND AMENDED COMPLAINT NO. 5:16-CV-02106 NC