seiu-uhw's lawsuit against duane dauner, greg adams and the california hospital ass'n, nov. 24, 2015

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  • 8/20/2019 SEIU-UHW's Lawsuit against Duane Dauner, Greg Adams and the California Hospital Ass'n, Nov. 24, 2015

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     ROGER &

    ROSENFELD

     Profeuional

     Cofpontion

    a V i n ^ pHkmy,SU M  200

  • 8/20/2019 SEIU-UHW's Lawsuit against Duane Dauner, Greg Adams and the California Hospital Ass'n, Nov. 24, 2015

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     ROGER&

    ROSENFELD

    ProftssioMl CoiporURm

     Mtfhi

     VfRi«e

     Pvfcwiy. Snile IM

    acdhCUUftnlaMJOl

    I.  INTRODUCTION

    1.

      This is a

     case to

     remedy the corrupt

     acts

     of Defendant

     C. Duane

     Dauner ( Dauner ) an

    his enablers. The conduct alleged herein arises from Defendant Dauner's decision to sell his v

    powers

     as Co-chair of the Board of Directors

     for

     Nominal

     Defendant

     Caring

     for

     Califomians,

    LLC ( CFC ) in exchange for

     favors

     that

     advance

     his own — but not CFC's — interests.

    2.

      CFC is

     a

     non-profit organization dedicated

     to

     increasing funding

     for Medi-Cal

     and

    thereby ensuring that millions of low income and disabled Califomians have

     access

     to high

    quality health

     care.

     CFC invested heavily in realizing this goal by pursuing a

     statewide ballot

     t

    would rely on revenue generated from he personal income taxes of Califomia's wealthiest

    individuals, and then channeling some

     of

     the revenue that is generated from hose taxes to Med

    Cal.

    3.  As Co-Chair and a

     Director

     of CFC, Dauner owes CFC a fiduciary duty of loyalty, goo

    faith, honesty and candor.

     Dauner

     also serves as the President and

     Chief

     Executive

     Officer

    ( CEO ) of the

     Califomia Hospital

     Association

      ( CHA ).

    4. As will be set forth herein. Defendant Daimer and his co-defendants breached each and

    every one

     of

     those

     duties

     when they

     agreed

     to shut

     down

     the

     operations of

     CFC.

     Specifically,

     

    coalition of employers and labor organizations (the  ABC

     Coalition ),

     with political interests th

    do not align with CFC, threatened to initiate ballot measures that

     would

     reign in the pay of

    hospital executives, cap the prices of medical services charged

     by

     hospitals, and require hospit

    to provide a certain level of charity care.

    5.  Because these

     ballot

     measures

     were

     direct

     threats

     to

     Davmer's other

     company, CHA,

    Dauner secretly met with the ABC Coalition and agreed to exchange his power to veto any

    proposed

     CFC

     action

     i f

     the

     ABC

     Coalition

     dropped their

     ballot initiatives.

      In

     effect,

     Dauner

     so

    out

     CFC

     and the dream of

     a fully

     funded

     Medi-Cal

     program

     for

     higher hospital executive pay a

    profits.

    6.  Plaintiff Service Employees Intemational Union, United Healthcare

     Workers

      West

    ( UHW ) is a

     member of

     the CFC and

     hereby

     brings suit on its own behalf and

     derivatively

     on

    behalf

     of CFC

     for

     Dauner's breach of fiduciary

     duty

     and related causes of

     action.

    2

    COMPLAINT

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     ROGER &

    ROSENFELD

     vai i i* Fwwwy.

     U l *

     30D

    II .

      PARTIES

    7.  Defendant C. Duane

     Dauner, an

     individual,

     is the

     Co-Chair

     and a Director of CFC. He

     

    also

     the President and

     CEO of CHA

     and the Califomia

     Association  of

     Hospitals and

     Health

    Systems

     ( CAHHS ). Upon information and belief,

     he maintains

     residencies

     in

     Sacramento

     an

    Palm Springs,

     Califomia.

    8.  Defendant Gregory

     A .

     Adams

     ( Adams ),

     an individual, is

     a Director and

     Treasurer

     of

    CFC.  In addition. Defendant

     Adams

     is

     an

     officer and

     the Chair

     of

     the

     CHA and CAHHS Boar

    of Directors.  Defendant Adams is also the

     Group

     President of

     Kaiser

     Permanente. Upon

    information and belief,

     he

     is a resident of

     Altadena,

     California.

    9.

      Defendant Mark

     R.

     Laret ( Laret ), an individual, is a Director of CFC. In addition.

    Defendant

     Laret is an officer of

     the

     CHA

     and

     CAHSS Boards of Directors.

      Defendant

     Laret

     is

    also

     the

     CEO of the University o f Califomia Medical

     Center, San

     Francisco. Upon information

    and belief,

     he

     is a resident of Marin, Califomia.

    10.

      Defendant James R. Holmes

     ( Holmes ), an

     individual,

     is a Director of CFC, In additio

    to. Defendant

     Holmes

     is

     an

     officer and

     the Chair-elect

     of

     the

     CHA

     and

     CAHSS Boards of

    Directors.  Defendant Holmes is also the President and CEO of Redlands Commimity Hospital

    Upon information and belief,

     he

     is a resident of Redlands, California.

    11.  Nominal Defendant Caring for Califomians, LLC

     is

     a Labor Management

     Committee

    established

     pursuant

     to

     the Labor-Management Cooperation Act of

     1978,

     organized under

    Califomia's

     Nonprofit

     Mutual Benefit Corporation

     Law.

     CFC's

     headquarters

     is

     located

     in

    Sacramento, Califomia.

    12.  Plaintiff Service Employees Intemational Union, United Healthcare

     Workers - West

     is

     

    labor organization that

     for

     all

     imes

     relevant

     to

     this

     complaint was

     a

     member

     of

     CFC. UHW's

    headquarters

     is

     located in

     Oakland,

     Califomia.

    13.

      UHW

     is

     ignorant

     of the tme

     names

     and

     capacities

     of

     the

     defendants sued in

     this

     Complain

    DOES

     1 through 10, inclusive, and therefore

     sue these

     defendants by such fictitious

     names

     and

    capacities.

      UHW will

     amend

     this

     Complaint

     to

     allege

     those DOE defendants'

     tme

     names

     and

    capacities when

     leamed.

      UHW

     alleges that

     each

     of

     the

     defendants named as

     DOES was

     in

     som

    3

    COMPLAINT

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     ROGER &

    ROSENFELD

     Corpomion

     MviM

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    manner

     responsible

     for the acts and omissions alleged in

     this

     Complaint.

    III .  JUR ISDICTION AND VENU E

    14. This Court has

     jurisdiction

     over this action pursuant to Article VI , section 4 of the

    Califomia

     Constitution and

     section

     1600 of the

     Califomia

     Code

     of Civil

     Procedure

     ( CCP ).

    15. This Court has personal jurisdiction over the Defendants who engaged in conduct, and

    who continue to

     engage

     in conduct, giving rise o the claims stated herein at locations within th

    State of Califomia and Alameda County.

    16.

      Venue

     is

     proper in

     this Court

     pursuant to, among other provisions,

     CCP

     §

     392(a),

     beca

    the injury occurred in

     this

     covinty and because

     CFC's

     primary

     place ofbusiness is within

     this

    county.

    IV .  FACTS

    A. TH E BR OKEN AND

      SEVERELY UNDERFUNDED

     MEDI-CAL SY STEM AND

    CFC'S M ISSION TO FIX IT AND IMPROVE T HE HEALT HC ARE OF

    MILLIONS OF CALIFORNIANS.

    1.  TH E MEDI-CAL PROB LEM.

    17.  Medi-Cal is Califomia's version of Medicaid, the

     federal program

     that provides health

    to low income and disabled persons. Under the Affordable

     Care

     Act  ( ACA ), the Medi-Cal

    program

     has expanded dramatically, and it will soon provide healthcare to three out of every t

    Califomians.

    18. Nearly

     13 million Califomians —

     mostly,

     children,

     seniors, and the

     disabled —

     are

    enrolled in the Medi-Cal program and rely on it for their health coverage. Almost half of the

    births

     in

     Califomia are

     covered by

     Medi-Cal, and one

     in two

     children

     relies on Medi-Cal for

     the

    health coverage. Fifty-six percent of Medi-Cal recipients are female.  And Medi-Cal pays for

    services

     covering two-thirds of Califomia's

     nursing home

     residents.

    19.  Yet, Medi-Cal is severely

     underfimded.

     Califomia ranks 49 out of iie 50 states in the

    amount that

     healthcare providers are reimbursed to provide Medi-Cal funded services. This

    means providers,

     such as hospitals and physicians, lose substantial amounts of money provid

    care to Medi-Cal recipients.  To

     account

     for this shortfall, these healthcare providers

     charge

     m

    to privately

     insured

     people, which

     drives

     up healthcare and insurance costs for everyone

    4

    COMPLAINT

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     ROGER &

    ROSENFELD

      Prolononal Corpontloo

    htotra Vai»»« PnfcMy,  a« UO

    (3iO)xn-iooi

    including those who get their health insurance through their employers. The

     insufficiency of

    Califomia's Medi-Cal funding also results in

     limited

     access

     to doctors and

     healthcare services

    those who depend on the Medi-Cal program for their health coverage.

    20. The

     insufficiency

     of

     Medi-Cal funding

     poses

     the

     largest threat

     to the

     quality

     of

     healthca

    for Califomians. Because Medi-Cal is

     such

     a poor payer, Medi-Cal beneficiaries are

    systematically denied

     adequate

     and

     timely care. Medi-Cal

     beneficiaries

     cannot

     obtain the

     care

    that they need, when they need i t, because many doctors simply

     cannot

     afford or refuse to tak

    new Medi-Cal patients.

    21 .  An

     inadequately funded

     Medi-Cal

     program

     also

     inflates the

     cost of

     commercial insuran

    by

     forcing

     consumers and their employers to subsidize the cost of

     insuring

     the Medi-Cal

    population, and it forces hospitals to seek artificial operational and financial  work-arounds to

    spread

     the burden

     of

     Medi-Cal losses across the hospital industry.

     As

     a result, hospitals

     lose

    billions of dollars

     each

     year.

    2.

      TH E

     MEDI-CAL SOLUTION.

    22.

      On May 5,2014, in

     an

     effort to

     address the

     inadequacy of Medi-Cal funding, CHA

     and

    UHW entered into what has been hailed as a breakthrough agreement that created  a

     strategic

    relationship

    designed

     to  change the face

     of

     healthcare

     in

     Califomia and serve as a new natio

    model

     for how

     employers and unions interact. êe

     CHA Press Release, CA

     Hospitals,

     SEIU-

    UHW Reach Agreement to Improve Healthcare, Create New Model of Labor Relations (May 6

    2014).

    23. CHA described its new partnership with UHW as unique because it committed C

    and UHW to focus on a shared strategic vision of improving health and healthcare deliv

    Califomia.... Ibid.

    24. The centerpiece of the CHA-UHW partnership was the creation  of

     a

     $ 100 million join

    advocacy

     conunittee to drive improvements to the healthcare delivery

     system

     that could not be

    obtained through direct negotiation

     between

     employers and labor unions. This

     would

     be

    accomplished

     by

     identifying new resources and financing approaches at the

     federal

     and

     state

    levels, including educational activities, legislative and regulatory efforts,

     a

     ballot initiative, or

    .  5_

    COMPLAINT

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    ROSENFELD

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     PrafasUutfl

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    25. The

     joint

     advocacy committee provided for in the  CHA-UHW

     partnership

     took the

     for

    of  CFC, established

     pursuant

     to the

     Labor-Management

     Cooperation  Act of 1978,  organized

    under

     Califomia's

     Nonprofit

     Mutual

     Benefit

     Corporation

     Law

     with

     the

      specific

     and

     primary

    purpose to:

    )

      Function

     as an

     industry-wide Labor

     Management

     Cooperation

    Committee, as permitted by the

     federal

     Labor Management

    Cooperation  Act of 1978  ( LMCA ), for the

     purposes

     of

     jointiy

    advocating on

     behalf

     of Califomia Hospital

     Association

     and

    Service

     Employees

     Intemational

     Union,

     United Healthcare Workers

    - West (the "Designators") for improved communication

     between

    representatives of

     labor

     and

     management; providing healthcare

    workers

     and employers

     with

     opportunities

     to study and

     explore

     new

    and innovative

     joint approaches

     to

     achieving organizational

    effectiveness;

     assisting healthcare workers

     and

     employers

     in

    solving problems of

     mutual

     concem

     not susceptible to resolution

    throu^

     the

     iadit ional collective bargaining

     process; studying and

    exploring ways of eliminating potential problems which reduce the

    competitiveness and

     inhibit

     the economic development  of the

    healthcare industry

     in Califomia; enhancing the involvement of

    healthcare

     workers

     in

     making

     decisions that affect

     their working

    lives;

     expanding and

     improving working relationships

     between

    healthcare workers

     and managers;  and any other permissible

    purposes

     under the LMCA; and

    Focus during the firsttwenty-four months after the date of

    incorporation

     on the

     following

     agenda: obtaining

     full

     Medi-Cal

    fimdijig and

     payments

     to

     hospitals

     for services rendered to Medi

    Cal beneficiaries to the

     maximum

     amount allowed

     imder federal

    law without

     reliance

     on a hospital  fee, tax, or assessment program,

    unless otherwise agreed by the Designators.

    26. CHA and UHW

     committed

     to each

     other

     to

     fund

      CFC.  In accordance

     with

     this

    commitment, CHA agreed to

     provide

     $80

     million

     in

     funding

     to

      CFC,

     and UHW agreed to

     pro

    $20

      million

     in funding. To

     date,

     CHA and UHW have contributed half of

     their

     funding

    obligations to  CFC.  CFC currently holds more than $7

     million dollars

     of UHW contributions

    which

     can only be

     spent

     by an action

     taken

     by the

     Board

     of

     Directors

     for

      CFC.

    B. THE

     STURCTURE

     AND OPERATION OF CFC

    27. Per CF C's

     Bylaws,

     CFC has two  "designators," CHA and UHW.

      Botii

      CHA and UHW

    are authorized to act through

     their

     designated representatives.  The designated representative f

    CHA is

     Defendant

     Dauner, while the designated representative for UHW is the President of

    UHW, David

     Regan ("Regan").

    6

    COMPLAINT

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    ROSENFELD

     kWM vnu^ PtAwsy Mu

     TOO

    Ckli'finfiMJOt

    (910)1)7-1001

    28.

      The primary

     authority of the

     "designators,"

     as set forth in Articles

     III and IV ofthe

    Bylaws,

     is the

     right

     to appoint a certain

     number

     of

     Directors

     to the Board of Directors.

    29.

      CF C consists

     of eight Directors.

     As

     per the Bylaws, the President of CHA, or

     whoeve

    his

     or her successor

     as

     CEO

     of

     CHA,

     is

     designated

     the

     CHA

     Co-Chair

     of

     CFC

     by

     virtue

     ofhis

    her

     position. Likewise, the President of UHW,

     or

     his

     or her

     successor, is the UHW Co-Chair

    CFC  by

     virtue

     ofhis

     or her

     position.

    30.

      Three

     of the

     other

     six directors

     are appointed

     by the President of CHA,

     and

     the remain

    three are appointed by the President of UHW.

    31.  Because he has been CHA 's President and CEO at all timesrelevant to this Complain

    Defendant

     Dauner has

     been

     CHA 's Co-Chair and Director of CF C at all relevant

     times.

    32. The

     other

     CHA Directors

     have

     included

     Defendants

     Adams,

     Laret,

     and

     Holmes

    (collectively

     with

     Defendant

     Daimer, the  CHA Directors").

     Defendants

     Adams,

     Laret,

     and

    Holmes are each officers of CH A and CAHHS and are subordinate to Defendant Dauner in

    CHA and CAHHS

     hierarchy.

    33.

      At

     all relevant

     times,

     the UHW Co-Chair has been

     Regan

     by

     virtue

     ofhis position as

    UHW's

     President. The

     other

     UHW

     Directors

     have

     included

     Arianna

     Jimenez ("Jimenez"), C

    Gualvez ("Gualvez"), and

     David Kieffer ("Kieffer").

    34.  In addition to the two Co-Chairs, CFC has a Secretary and a

     Treasurer.

     At all relevant

    times,

     Jimenez has served as Secretary and Defendant

     Adams

     has served

     as

     Treasurer.

    35.

      CF C

     is

     independent and legally distinct

     from CHA,

     CAHHS, and

     UHW. Even

     tiiough

    Director may also serve as

     an

     officer

     or director

     of

     CHA,

     CAHHS,

     or UHW,

     each Director o

    CFC owes a duty to CFC that obligates them to

     "perform

     the duties of a

     director

     in

     good

     fai

    a

     manner such director

     believes

     to be in the

     best

     interest

     of

     this corporation

     and

     with such

     ca

    including

     reasonable

     inquiry, as an ordinarily

     pmdent

     person in a like

     situation

     would use un

    similar circumstances."

    36.  CFC

     employs

     an

     Executive

     Director, Peter

     Ragone ("Ragone"),

     who reports to the

     Co

    Chairs.

    37. The Board of

     Directors

     must authorize any expenditure. The Executive Director is

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      R O G E R &

    R O S E N F E L D

     Pnfisslona]

     Corporal

     icm

    m

    V i l h ( * P B f a i 4 y . & i i U » 0

    A l n i c i l h C d i l M 9 4 » l

    (Jl0)337-I00)

    authorized to

     sign

     checks for

     amounts

     up to fifty

     thousand

     dollars, provided

     that

     the Board ha

    authorized such

     expenditures,

     but he

     mustfirstreceive approval

     from

     both

      Co-Chairs. The C

    Chairs must

     jointly

     sign

     checks for

     expenditures

     over fifty thousand

     dollars

     and

     only

     for Boar

    authorized expenditures.

    38.  In order for the

     Board

     to

     take

     any action, the Bylaws of CFC

     require

     a quorum to be

    established.

      The

     Bylaws define a

     quorum

     as "[t]he presence of both

     Co-Chairs

     plus at

     least

     t

    other

     CHA

     Directors

     and two

     other SEIU-UHW Directors

      "

     Once

     a quorum is

     establishe

    an

     action may only be approved

     if

     "both

     Co-Chairs

     plus

     at

     least

     two of the CHA Directors and

    two of the

     SEIU-UHW

     Directors" vote in favor.  Thus, either Co-Chair may veto an action

    simply by

     withholding

     his approval.

    C.

      CFC S

     BALLOT MEASURE AND THE ABC COALITION S COMPETING

    BALLOT

     MEASURE

    39.  One of CFC's major

     purposes,

     and its

     sole focus

     for its first two

     years,

     is and

     should

    continue

     to be to

     obtain full funding

     for Medi-Cal.

    40.  To

     this

     end, on July 28,2015, the Board of Directors unanimously approved a "Strateg

    Plan"

     aimed at

     "obtaining

     fiill Medi-Cal funding and

     payments

     to

     hospitals

     for services rende

    to

     Medi-Cal

     beneficiaries

     to the

     maximum amount allowed under federal

     law

     without reliance

    a hospital fee, tax, or

     assessment program."

    41

    As

     part o f the Strategic Plan adopted

     by

     the Board o f Directors, the parties devel

    initiative that would be placed on the November 2016 statewide ballot that would rely, in

    revenue generated from he current but temporary personal income tax rates for individ

    making over $300,000 year, as established by Proposition 30. In addition, CFC's initia

    contain two additional increased tax rates for individuals making over $1 million and $

    annually. This initiative was entitled The Invest in California's Children Act.

    42.  A

     conservative estimate

     is

     that these taxes would produce

     $ 10 billion in increased ann

    revenue.  The

     revenue

     generated by the

     taxes

     would be distributed to public

     education

     (K-14)

    (45%),

     higher

     public

     education (5%),

     Medi-Cal (40%), and

     early leaming programs

     (10%).

    43.  If passed, CFC's initiative would, by

     conservative

     estimates, produce $4 billion in

    permanent annual revenue

     for Medi-Cal, with

     most of the money going to doctors

     and

     hospit

    8

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    RG. ROGER &

    ROSENFELD

    PFo&ssiMia) Corporaiiaa

    ViIbt«riifc««y:S«il«UO

    This would

     fully fund

     Medi-Cal,

     and,

     in

     the

     process, improve

     the

     lives

     of

     millions

     of

    Califomians v̂ ô rely on the

     Medi-Cal

     program.

    44. At or around the

     same

     time CFC was developing its idea of a ballot initiative to fix and

    fully

     ftmd

     he

     Medi-Cal

     program,

     a

     separate coalition that includes

     the

     Califomia

     Teachers

    Association  ( CTA'O,

     the

     Califomia

     Medical

     Association  ( CMA ),

     and the

     SEIU State Counc

    ("State Council)

     (collectively

     known as the  ABC Coalition"), began to develop a competing

    ballot

     initiativetiiat would use

     revenue

     derived from the Proposition 30

     taxes

     to fund K-12

    education,

     but not

     Medi-Cal, higher education or early leaming.

    45.   In or around August 2015,  CFC became

     aware

     that the ABC Coalition was planning to

    file

     a competing initiative.  At

     this time,

     various

     Directors

     of CFC

     advocated that

     CFC fil ts

    initiative

     with the

     Califomia Attomey General before

     the

     ABC Coalition filed

     ts initiative, an

    concurrentiy engage

     representatives

     of the A BC Coalition in an effort to get the two organizati

    to agree on

     a single

     initiative rather than having competing

     initiatives

     on the 2016

     ballot.

    46.

      In

     or

     around August

     2015,

      Defendant Dauner

     claimed

     that

     he had

     knowledge that

     the

    ABC Coalition would not meet with CFC.  Defendant Dauner

     made

     it clear that he opposed 

    proposal

     that

     called for CF C to fil ts own initiative,

     despite

     the

     fact that

     the

     A BC

     Coalition

    might file

     their

     initiative first

     and put

     CFC's initiative

     at

     an electoral disadvantage.

    47.  Because

     Defendant

     Dauner, as

     a

     Co-Chair o f CFC, must approve any action of the Boa

    of Directors, he

     effectively

     vetoed filing

     CFC's

     Invest

     in California's Children

     Act

     in

     August

    2015.

    48.

      On September 14,2015,

     the

     AB C Coalition filed

     ts

     competing

     initiative.

     The School

    Funding and Stability Act of 2016, with the Califomia

     Attomey

     General.

    49.

      Defendant

     Dauner's

     opposition

     to

     CFC's

     filing

     ts own

     initiative

     was

     significant,

     becau

    it provided the

     A BC

     Coalition with multiple

     strategic

     and procedural advantages

     over

     CFC,

    which

     had yet to file ts own initiative.

      For example, a party that files

     an

     initiative before anot

    that

     will

     compete with it can (1)

     collect

     signatures for the initiative before the party filing a

    competing initiative, and (2) once qualified, the initiative

     receives

     preferential

     placement

     on t

    election ballot.

    9

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     ROGER

     &

    ROSENFELD

     PnfitfsioDal Corpomion

    U ^   VUhp M« ra r, SnlH

     zoo

    a» di .Ct] i l i nbH»l

    (3IO)3]7-im

    50.  Defendant Dauner intentionally

     opposed

     the filing of CFC's initiative prior to the filing

    the ABC Coalition's initiative for

     a

     nefarious purpose - that is, in order to put CFC's initiative 

    a

     disadvantage,

     while providing both a strategic and

     procedural advantage

     to the

     ABC

     Coalition

    Defendant Dauner, however, kept

     to

     himself the fact

     that

     he had

     been

     secretiy

     working

     with

     th

    ABC Coalition to undermine CFC's initiative.

    51.  On September

     15,2015, after

     the

     ABC

     Coalition had

     alreaidy filed

     ts

     initiative,

     the Boar

    of Directors

     unanimously

     voted to file CFC's initiative on September 21,2015. In accordance

    with

     the Board's

     unanimous

     vote, CFC's

     initiative. Invest

     in California's Children

     Act,

     was  file

    with

     the

     Califomia

     Attomey

     General.

      The

     proponents

     of the initiative are

     Gualvez,

     who

     serve

    on the Board o f Directors  of CFC, and Dietmar Grellmann, Senior

     Vice

     President of Professiona

    Services for CHA. Defendant Dauner personally selected Grellmann to serve as the proponent

    and Grellmann is

     Dauner's

     subordinate.

    52. After personally selecting Grellmann as the proponent. Defendant Dauner threatened

    Regan that

     Grellmann would not

     participate in

     the filing and processing of CFC's initiative

      i f

    CHA decided

     to end its partnership

     with UHW. Regan

     informed Defendant Dauner that

    Grellmann could not unilaterally block the filing and processing of CFC's initiative.

    53. On

     October 26,2015,

     the Board of Directors

     unanimously agreed

     to fund a

     campaign

    committee with

     a $9 million dollar loan and

     $1

      million dollar contribution, to support CFC's

    initiative.

     Invest

     in California's Children

     Act.

     Although Defendant Dauner approved

     this

     action

    he had no intention

     of

     approving any

     expenditure that

     would

     enable

     the

     committee's operation

    because

     ofhis

     secret

     deal

     with

     the

     ABC

     Coalition to

     undermine

     CFC's initiative.

    D.

      AT T H E EXPENSE OF

     MILLIONS

     O F CALIFORNIANS

     WHO

     R E L Y ON

     MED

    CAL,

     DEFENDANT

     DAUNER AND CH A EMBARKED ON

     A COVERT

    CAMPAIGN  TO UNDERMINE

     CF C

     B Y

     W O R KING

     W I TH

     TH E

     ABC

    COALITION

    54.  In or

     around

     March 2015, Defendant Dauner had been secretiy

     meeting with

     members o

    the A BC Coalition, altiiough iie ABC  Coalition had not yet been formally organized. Defendan

    Dauner routinely met

     with

     Dustin

     Corcoran,

     the CEO of

     CMA, in order to

     keep him informed o

    the

     business

     of CFC, including but not

     limited

     to CFC's confidential  Strategic

     Plan.

    55. During

     this same

     period. Defendant Dauner also met

     with

     representatives of the SEIU

    10

    COMPLAINT

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     ROGER &

    ROSENFELD

     ProTcislonil Corporaiioii

     hriEiray, SdM 300

    OIO)3]T.|0OI

    State

     Council in order to keep

     them

     informed ofthe

     business

     of CFC, including but not limite

    CFC's confidential "Sfrategic

     Plan." The

     SEIU

     State

     Council

     is led by

     Jon Youngdahl

    ("Youngdahl"),

     who is the Executive Director ofthe State

     Council,

     and Laphonza

     Butier

    ("Butier"),

     who is

     tiie

     President

     of

     tiie

     State

     Council.

    56.

      In addition, Butler

     is the

     President

     of the

     SEIU, United Long-Term Care Workers

    ( ULTCW )

     as

     well

     as tiie

     provisional President

     of

     SEIU, Local

     2015.

      Local

     2015 represents

    approximately 285,000 home-care and nursing home workers m California, two constituencies

    whose employers

     rely on Medi-Cal funding and would benefit from a fully funded Medi-Cal

    program.  Local

     2015 is the

     result

     of

     a merger

     of home

     care and nursing

     home members

     from

    tiiree

      SEIU-affiliated Unions:

      SEIU

     Local

     521,  ULTCW, and UHW.  As a

     result

     of tiie merg

    UHW  lost half its membership to

     Local

     2015.

    57. Prior to the merger,

     representatives

     ofthe SEIU

     State

     Council informed

     Defendant

     Da

    that

     Regan would soon lose

     half of UHW's membership and that Defendant

     Dauner

     needed 

    deal with Butier

     and the State

     Council

     - not

     Regan

     and UHW -  ifhe wanted to

     accomplish

     an

    legislative and policy goals that were important to CHA's members.

    58.  On infonnation and belief.

     Defendant

     Dauner met with representatives of CTA in

     orde

    keep them

     informed

     of the business of

     CFC, including

     but not

     lihiited

     to

     CFC's confidential

    "Sfrategic

     Plan."

    59.

      Beginning in or

     around March 2015, Defendant

     Dauner

     decided to

     work

     covertly

     with

    CMA, the SEIU State

     Coimcil,

     and CTA, while duplicitously pretending to carry out his duties

    a Director and Officer in the interest of CFC.

    60.  Defendant Dauner chose to work

     with

     the ABC Coalition for

     several

     reasons.  First, he

    feared

     CTA's

     political

     reach

     in

     Sacramento. Second,

     he no

     longer

     wanted

     to be

     involved

     ih a

    "sfrategic

     partnership" with UHW because the partnership was

     threatening

     his

     power

     within

    CHA, and members of CH A were

     calling

     for an end to the

     partnership

     for ideological reasons.

    Third, he believed that he could take

     advantage

     of an

     intemal

     SEIU

     disagreement

     between

     Bu

    and

     Regan

     regarding the ransfer of UHW members into Local 2015.

    61.  In or around August 2015, after the ABC Coalition had officially formed and after the

    11

     

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    ERG, ROGER &

    ROSENFELD

     ProfeBlonaJ

     Catpomloa

    Uvtn

     VUU|i hritMny;

    S IU  200

    '  '•.CdifinfeWOI

    ABC Coalition had

     drafted

     its competing

     initiative.

     Defendant Dauner took actions to sabotag

    CFC's initiative, while hiding from his Co-Chair and UHW Directors the fact that he was secr

    working with the

     ABC

     Coalition to imdermine

     CFC's

     initiative.

    62.

      To

     this

     end.

     Defendant

     Dauner

     opposed

     the

     filing

     of

     CFC's

     initiative

     before

     the

     ABC

    Coalition filed ts

     initiative.

     He

     also

     refused to authorize expenditures that CFC had incurred

    related to a

     public

     Medi-Cal campaign and its initiative campaign.

    63.  In or around August 2015,

     Defendant

     Dauner promised the A BC Coalition that he wou

    get

     CFC

     to

     abandon

     its

     effort

     to get its

     initiative

     enacted.

    64.  In an effort to avoid being exposed as a saboteur, Defendant Dauner did not initially s

    to block every action that CFC

     decided

     to take regarding CFC's initiative. Defendant Dauner

    failure to get CFC to abandon its initiative did not sit well with the

     ABC

     Coalition, which

    believed

     that it

     had

     been double-crossed by Defendant

     Dauner.

    65. As a

     result,

     on

     October

     29,2015, in

     order

     to bring

     maximum pressure

     and leverage to

     

    on Defendant Dauner, attomeys for the A BC Coalition filed three ballot initiatives aimed

     dire

    at the hospital

     industry:

     the

     Charitable

     Hospital Executive Compensation Act of 2016, which, i

    enacted, would limit the pay of

     hospital executives;

     the Fair

     Healthcare

     Pricing Act of 2016,

    which would cap the

     prices

     of

     medical

     services

     charged

     by hospitals; and the Charity

     Care

     Ac

    2016, which would require

     hospitals

     to provide a certain level of charity care.

     These

     measure

    enacted,

     would

     cost

     the hospital industry millions of dollars.

    66.

      These

     initiatives

     captured

     Defendant Dauner's attention.

     Following

     the filing of

     these

    initiatives. Defendant Dauner, in consultation and agreement

     with

     the other Defendants, decid

    to make a deal with the ABC Coalition. The agreement consisted of Defendants, on behalf of

    CHA,

     offering

     to

     support

      inancially

     the

     A BC

     Coalition's

     original

     initiative

     and

     offering

     to use

    his

     veto

     power, as

     Co-Chair

     of CFC, to

     veto

     any

     Corporation

     action in exchange for the

     ABC

    Coalition dropping its three

     later

     initiatives and

     redrafting

     the ABC

     Coalition's

     original initiat

    to provide at

     least

     $1

     billion

     dollars to the hospital

     industry.

    67.  On November 2,2015, Defendant

     Dauner

     requested a

     conference

     call

     with Regan

     and

    multiple other persons,

     including

     other Directors of CFC to discuss CFC's initiative and his

    12

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    RG, R OGER

     &

    ROSENFELD

     PrarttfSlonal Coipotalkn

    Jia)]3T.|00l

    94501

    agreement with the A BC Coalition.

    68

    On the call. Defendant Dauner revealed that he had been secretiy meeting and n

    with the ABC Coalition regarding its competing initiative. The School Funding

     and Sta

    of2016

    69.

      Defendant

     Dauner

     explained that

     he had engaged in these

     covert actions

     because the C

    Board

     of

     Directors

     had insfructed him to do so and

     that a

     "substantial number of

     hospitals,"

    affiliated

     with

     CHA did not want CHA to participate in CFC

     or

     to

     continue

     its

     partnership wit

    UHW. The reason that a substantial number of

     hospitals wanted

     to end the sfrategic partnersh

    between

     CHA and UHW is because these

     hospitals

     are philosophically opposed to the

    unionization ofthe hospital

     industry and

     seek

     to

     remain non-union

     so

     that they

     may

     continue

    without

     interference,

     to

     provide

     their

     employees

     substandard working

     conditions,

     pay, and

    benefits. Because the ABC Coalition does not

     consist

     of any labor organization that

     seeks

     to

    organize

     hospital

     workers

     in

     Califomia,

     working with the A BC Coalition is

     preferred over

    working with UHW.

    70.

      During

     the

     call. Defendant Dauner revealed that

     his

     discussions

     with the

     A BC Coalitio

    had led to a written agreement, executed by and

     between

     CTA, CMA, and the SEIU

     State

     Cou

    and

     Defendant

     Dauner and CHA.

    71 According to Dauner, the agreement with the ABC Coalition provides that Defen

    CHA

     will

     jointiy sponsor, and contribute

     financially o

     the ABC Coalition's The School

    and Stab ility

     Act

     of 2075

     that

     is

     in direct competition with CFC's initiative. Invest in Cal

    Children Act

    72.

      Defendant

     Dauner

     further agreed

     to to veto any

     expenditure"

     to

     support

     CFC's initia

    and

     Adams,

     Laret and

     Holmes agreed

     to

     support

     Dauner

     in

     this cessation

     of

     CFC's

     activities.

    Thus, the CHA Directors agreed to terminate all of CFC's

     operations

     by using Defendant

    Dauner's veto

     power

    73. Put otherwise. Defendant Dauner agreed to use his position of

     power

     to quash

     CFC's

    initiative and to support the ABC Coalition's competing initiative, and the

     other

     CHA Directo

    accepted

     and

     enabled this decision.

      As a result, lacking any financial support, CFC's initiativ

    13

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     ROGER

     &

    ROSCNFELD

     Prarenlofial

     Corpofailoa Uaraa Pvfcvqr. Sniu m

    Abmdi,CilirtnUM»l

    (}0)337-1001

    certain to

     fail and

     the

     ABC Coalition's initiative

     will have no

     effective

     opposition.

    74. As

     part

     of the

     quid

     pro quo that Defendant

     Dauner and CH A

     entered into

     with

     the

     AB

    Coalition,

     Defendant Dauner

     and

     CH A agreed to sponsor

     ahd

      inancially support the

     ABC

    Coalition's initiative.

     The

     School

     Funding

     and

     Stability

     Act

     of 2016.

      In

     exchange

     for

     Defenda

    promise

     to

     terminate

     the efforts of

     CFC,

     Defendants

     confirmed

     that the

     ABC Coalition had

    agreed to

     withdraw

     its three

     later-filed

     initiatives - the Charitable Hospital Executive

    Compensation

     Act

     of 2016; the Fair Healthcare Pricing Act of 2016;

      and

     the Charity Care

     Act

     

    2016 (collectively, the

      AB C Ballot Measures")

     -

     that

     threatened the

     hospital industry's

     reven

    and

     which the

     ABC Coalition had

     used to

     bring

     Defendants "to heel."

    75.

      Dauner

     sold his

     veto

     power as

     a Co-Chau:

     of

     CFC in exchange for

     the

     ABC Coalition

    withdrawing

     its three

     anti-hospital

     initiatives

     and

     the

     ABC

     Coalition rewriting its origuial

    initiative to provide the hospital

     industry with at

     least

     a

     billion dollars

     in annual revenue.

    76.

      Adams, Laret

     and Holmes

     approved

     this sale

     after

     the

     fact and

     have since agreed to

     s

    down

     CFC

     as

     part

     of the

     deal with

     the

     ABC Coalition.

    77.

      On

     November 5,2015,

     CHA publicly

     announced it

     had reached an agreement with

     "th

    Califomia

     Medical Association,

     the Califomia

     Teachers Association and

     SEIU Califomia Stat

    Council... to

     sponsor

     a new ballot measure that will extend the temporary income tax provis

    of

     Proposition

     30

     from

     Jan.

     1,2019 iirough

     Dec.

     31,2030." CH A Press Release, CHA Joins

    With

     Doctors, Teachers,

     and State Workers to Sponsor Single Prop. 30 Ballot

     Measure

     (Nov.

    2015).

    78

    The public aimouncement also made clear that CHA's financial and advocacy

    will

     be

     devoted

     to

     enacting this

     new

     jointiy sponsored initiative. [And] CHA will not pr

    support for any other Proposition 30 extension initiative. Ibid.

    79.

      On

     November 18,2015, Defendants spoke

     with Regan regarding

     the

     ABC Coalition's

    initiative.

     Defendants

     pleaded

     with Regan

     to dissolve CFC.  Regan, however, refused to agre

    dissolution.

      In accordance with

     his

     agreement with

     the

     ABC Coalition,

     Defendant

     Dauner sta

    that he would exercise his

     veto

     power, as Co-Chair, on any

     and all decisions

     that came before

    CFC

     regarding

     expenditures related to

     CFC's

     initiative, which CFC

     had

     unanimously voted to

    _14

    COMPLAINT

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     ROGER A

    ROS£NFEU>

     Piofbstlonal Coipontion

     Martaa

     VObgt hifcwsy. Bttiu

     200

    (5IO}3r-iaol

    and

     fund.

    80.  During

     this

     conversation, Dauner explained that his decision to veto any and all

    expenditures

     had nothing to do with his fiduciaryduty and loyalty to CFC. Rather, Defendant

    Dauner

     explained that

     his

     decision to veto any and

     all expenditures

     was

     based

     upon

     (1)

     his

    agreement to support and

     finance

     he ABC Coalition's initiative, which

     is

     in direct

     competition

    with

     CFC's

     initiative, and (2) his

     loyalty

     to CHA and CHA's Board

     of

     Directors,

     which

     had

    durected

     him

     to end

     his participation with UHW

     and CFC.

    81.  By refusing to approve any expenditure related to CFC's initiative. Defendant Dauner 

    CHA

     have

     blocked the ability

     of

     UHW to expend any portion

     of

     its more than

     $7 million

     dolla

    contribution to

     CFC

     in support of CFC's initiative.

    82.  Defendants' seizure of UHW's contribution of more than $7 million

     serves

     only the

    interest of

     the ABC Coalition,

     which Defendants have

     now

     agreed

     to financially

     support,

     beca

    it

     means

     that the ABC

     Coalition

     can run a campaign in support of

     its

     initiative without a

    financially backed opposition and without

     facing

     a financially-sfrong  competitor.

    83.  Defendants' agreement

     with

     the ABC

     Coalition

     is in direct confiict

     with

     their fiduciary

    duties

     to CFC.

    84. The agreement

     with

     the

     ABC Coalition

     was negotiated  in secrecy and

     without f i i l l

    disclosure and specifically requires Defendant

     Daimer

     to act in a manner confrary to the best

    interests

     of

     CFC.

    85.  Because Defendant

     Dauner

     can veto any action

     of

     CFC by

     virtue

     ofhis position as Co-

    Chair and

     because

     the three other

     CHA-appointed

     Directors are Defendant Dauner's subordma

    at CHA, any

     effort

     to remedy Defendant Dauner's conduct

     or

     to

     demand

     that CFC bring suit

    against

     Defendant Dauner

     for

     breach

     of

     fiduciary

     duty

     would

     be

     futile.

    First

     Cause

     of Action

    (Breach of

     Fiduciary

     Duty)

    U H W , on

     Behalf

     of CFC, against Defendants

    86.  UH W

     hereby incorporates

     the allegations set forth iri Paragraphs 1-85

     of

     this Complaint

    by

     reference as i f set forth in full herein.

    87.  At all

     imes

     relevant to this Complaint, UHW has been a member of CFC, as that

     term

     

    _15

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     ROGER A

    ROSENFELD

     Prtrfcttlana] Caporaiion

     VtOifa

     PrtiMy.

     Suha

     300

    310)337.1001

    defined by Califomia Corporation Code § 5056, because UHW has the right o vote for the

    election

     of a dfrector

     or directors, on

     a

     disposition

     of all

     or substantially

      all of

     the

     assets of

     CFC

    or on a

     merger

     or dissolution.

    88.

      Califomia

     Corporations

     Code

     §

     7231 obligates

     directors, officers and

     executive

     board

    members to execute their duties in good faith and with such care as an ordinarily pmdent

     perso

    in

     a like

     position would

     use

     under

     similar

     circumstances.

     This duty does not exist solely within

    statute,

     but

     within Califomia

     common

     law

     as

     well.

    89.

      As

     Directors

     of

     CFC,

     Defendants

     owe CFC the

     highest

     degree

     of honesty

     and

     loyalty

     a

    fiduciary and are

     under

     a statutory and common law duty take no actions adverse to CFC, an

    conduct themselves with the utmost good faith, trust, candor, and confidence with regard to CF

    90.  Because Defendants have unilaterally elected to terminate the operations of CFC, have

    failed

     to conduct themselves with candor,

     have

     withheld critical information from CFC, and

     h

    committed

     themselves to a course of

     action

     directiy adverse to

     the purposes and

     goals of

     CFC,

    they

     have

     breached thefr

     fiduciary duties

     to CFC and

     have failed

     to act in its best interest.

    91.

      This

     breach

     has caused, and

     continues to

     cause, CFC damage

     in

     an

     amount

     to be

    determined at

     trial.

    Second Cause

     of Action

    (Breach of

     Fiduciary

     Duty)

    UHW  against

     Defendants

    92.  UHW

     hereby

     incorporates the allegations set forth in Paragraphs 1-91 ofthis Complain

    by

     reference

     as

      i f

     set forth

     in full

     herein.

    93.

      At all

     times relevant

     to

     this Complaint, UHW has

     been a member of

     CFC, as

     that

     term

    defined by Califomia Corporation Code § 5056, because UHW has the right o vote for the

    election of a director or directors, on disposition of

     all

     or substantially

     all

     of the

     assets

     of CFC,

    on

     a merger

     or dissolution.

    94.  Califomia Corporations Code § 7231 obligates directors, officers and executive board

    members to execute their duties in good faith and with such care as an ordinarily pmdent perso

    in

     a like position

     would

     use

     under similar cfrcumstances.

     This duty does not exist solely

     within

    statute, but within Califomia common law as

     well.

    _16

    COMPLAINT

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     ROGER

     A

    ROSENFELD

     CoipwatioD

    Uufaa Vi|l>c« Fwtmy.

      S D I U

     300

    (310)}37I00I

    95.  As Dfrectors

     of

     CFC,

     Defendants

     owe CFC the

     highest

     degree

     of

     honesty and

     loyalty

     a

    fiduciary and are

     under

     a

     statutory

     and common law

     duty

     take no actions adverse to CFC, and

    conduct themselves with the utmost good faith, tmst, candor, and confidence with regard to CF

    96.

      Because

     Defendants

     have

     unilaterally

     elected

     to

     terminate

     the

     operations

     of

     CFC, have

    failed to conduct themselves with candor, have withheld critical information from CFC, and ha

    committed themselves to a

     course of

     action directiy adverse to the purposes and goals

     of

     CFC,

    they

     have breached

     thefr

     fiduciary duties to CFC and have failed to act in its best interest.

    97. This

     breach

     uniquely harmed UHW among the members because CFC is comprised of

    two designators, UHW and CHA.  Because

     Defendants

     conduct in breaching thefr fiduciary

    duties was in furtherance of CHA's interests and confrary to

     UHW's,

     Defendant' conduct caus

    a unique injury to UH W.

    98.

      This

     breach has

     caused,

     and continues to

     cause, UHW damage in an

     amount

     to

     be

    determined at trial.

    Third Cause

     of Action

    (Fraud by Concealment)

    UHW, on Behalf of CFC, against Dauner

    99.  UHW hereby incorporates the allegations set forth in Paragraphs 1-98 of this Complain

    by reference as  i f set forth in  f i i l l herein.

    100.  Civil Code section 1710 specifies fraud can consist of (1) the suggestion, as a fact, of th

    which

     is not tme,

     by one

     who does not

     believe

     it to

     be tme [uitentional misrepresentation of

     fact

    and (2) the suppression

     of

     a fact, by one who is bound to

     disclose

     i t, or who gives information o

    other facts which are likely to mislead for want of communication of that fact [concealment or

    suppression

     of

     fact].

    101. As

     a Co-Chair and Director of

     CFC,

     Dauner

     has a

     fiduciary

     duty

     to CFC

     which

     includes

     

    duty

     of

     candor.

    102. When Defendant

     Dauner failed

     to

     disclose

     to CFC his secret negotiations with the ABC

    Coalition,

     Defendant Daimer intentionally failed to disclose an important fact that was known

    only to him and that CFC

     could

     not

     have

     discovered,

    103.  Because Dauner did not disclose these secret

     agreements,

     Dauner was able to underm

    .  17

    COMPLAINT

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     &

    ROSENFELD

     Pnrfkssiofttl Cofpomlion

    St

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     &

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    proposed expenditures.

    115. The decision to cease all expenditures was not taken as a proper

     Board

     action and

    therefore

     CFC

     did

     not

     consent

     to

     it.

    116. This action dfrectiy and proximately

     caused

     CFC harm

     in

     an

     amount

     to

     be

     established a

    tiial.

    Sixth Cause of Action

    (Violation of Business & Professions Code

     §§ 17200

     etseq.)

    U H W,

     on Behalf of

     CFC,

     against Defendants

    117.

      UHW

     hereby incorporates the

     allegations

     set

     forth in Paragraphs

     1-116 of this Complain

    by reference as  i f set forth in full herein.

    118.  Defendants'

     acts

     and

     practices

     as detailed above

     constitute acts

     of unfafr competition.

    119.

      Defendants

     have engaged in an unlawful, unfafr orfraudulent business

     acts

     and/or

    practices within

     the

     meaning

     of

     Califomia

     Business

     & Professions Code §

     17200.

    120.  All

     parties

     to this action are

      persons

    as

     that term is defined in Califomia Business and

    Professions Code § 17201.

    121.

      Defendants

     have engaged in an  unlawful business

     act and/or

     practice by engaging in

    conduct set

     forth

     above.

     These business acts

     and

     practices

     violated

     numerous

     provisions of

     law

    including, inter alia, Califomia Penal Code § 641.3 and Califomia Corporations Code § 7231.

    Plaintiff

     reserves the right o identify additional violations of

     law

     as

     further

     investigation

    warrants.

    122. Califomia Penal Code § 641,3(a) prohibits employees

     from

     accepting, or agreeing to

    accept, anything of

     value from a

     person other than his

     or

     her employer cormptiy

     aiid vvithout  ti

    knowledge or consent ofthe employer, in retum for using or agreeing to use his or her position

    for

     the benefit

     of

     that other person.

    123. Califomia Penal Code § 641.3(d)(1) defines

      employees

    to include directors such as

    Defendants.

    124.

      Califomia Penal Code §

     641.3(d)(3) defines cormptiy as intending

     to injure

     or defraud

    employer.

    125.  Because Defendant Dauner secretly and without

     CFC's

     consent agreed to cease

     the

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    ERG, ROGER &

    ROSENFELD

     Prolbsilonal Corporatloa

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    operations of CFC in exchange for the ACB

     Coalition's

     promise to withdraw the ABC Ballot

    Measures and because

     Defendant

     Dauner

     intended

     to injure and/or defraud C FC by entering 

    this

     agreement.

     Defendant Dauner violated Califomia

     Penal

     Code § 641.3  and thus committed

    unfafr, unlawful,

     and/or

     raudulent

     business

     act

     or

     practice within

     the

     meaning

     of California

    Business and Professions Code § 17200.

    126.  Because

     Defendants

     agreed

     without

     CFC's consent to terminate the

     operations

     of CFC

    exchange for the A CB

     Coalition's

     promise to withdraw the ABC Ballot

     Measures

     and

     because

    Defendants intended

     to injure and/or

     defraud

     C FC by entering into this

     agreement. Defendan

    violated Califomia Corporations Code § 7231, which obligates

     directors, such

     as Defendants, 

    mutual benefit corporations,

     such

     as CFC, to

     perform

     thefr duties in good faith, in a manner

     

    director

     believes to be in the best interests of CFC and

     with such care, including

     reasonable

    inquiry, as

     an

     ordinarily

     pmdent

     person in a like

     position

     would use under

     similar

     cfrcumstan

    Defendants thus committed an unfair, unlawful

     and/or

      raudulent business act or

     practice with

    the meaning of Califomia Business and

     Professions

     Code § 17200.

    127. By engaging the aforementioned conduct, CFC has suffered injury in fact and has lost

    money or property as a result of

     Defendants' conduct.

    128.  UH W brings this Cause of Action

     derivatively

     and on

     behalf

     of CFC and on

     behalf

     of t

    public as private

     attomeys

     general

     pursuant

     to Business

     & Professions Code § 17204.

    129.  Pursuant to

     Califomia

     Business &

     Professions

     Code

     §

     17203, UHW,  on behalf of CFC

    seeks a

     temporary, preliminary, and/or

     pennanent

     order

     from this Court

     prohibiting

     Defendan

    from taking fiuther

     actions against

     the

     interest

     of CFC, removing

     Defendant

     Daunerfrom

     hi

    position

     as

     director

     and co-chair of CFC, and refomung CFC's By-Laws so that CHA may

    appomt

     a

     Co-Chafr

     other than

     CHA's

     President.

    130.  Pursuant to Business &

     Professions

     Code § 17204,

     UHW,

     on behalf of CFC,

     seeks

     an

    order

     of this Court enjoining Defendant Dauner

     from

     continuing to engage in the acts as set

     fo

    in

     tiiis

     Complaint, including

     holding

     the

     position

     of Director

     and Co-Chair

     of CFC.

    131.  CFC will be irreparably harmed if

     such

     an

     order

     is not granted.

    / / /

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     ROGER

     &

    ROSENFELD

     vaiati

     M n y ;

      SBiu

     300

    AhmdhCillfbnuMMI

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    139.  As a

     proximate

     result of Defendant Dauner's bad faith actions, unlawfiil conduct, and

    breach

     of fiduciary duty, UHW has suffered and

     will

     continue to

     suffer

     substantial and irrepara

    harm.

    140

    C F C

      is

     a

     mutual benefit corporations

      a s

     defined

     b y

     a nd

     govemed

     b y

     Califomia

    Corporations Code

      §

     § 7110

     e / seq

    141.  Pursuant to CFC's By-Laws, UHW is one of two  Designators and has the right o

    appoint half the Board of

     Dfrectors

     and is

     therefore

     a

      member

    as that term is defined by

    Califomia Corporations Code § 5056 and a 50% shareholder as that term is understood

     under

    Califomia Corporations Code §§ 5071-5072,

    142.  Califomia Corporations Code § 304

     authorizes

     the Court to remove from

     office

     any

    director

     in

     case

     of fraudulent

     or

     dishonest acts

     or

     gross abuse of authority or

     discretion

     with

    reference to CFC and may bar from reelection any director so removed for a period prescribed b

    the Court upon the suit

     of

     shareholders holding at least

     10 percent of

     the number

     of

     outstanding

    shares ofany class.

    143.  UHW, as a shareholder with more than 50% of the shares in CFC, files such a suit base

    upon the unlawfiil, dishonest, and bad faith abuse of discretion of Defendant

     Dauner

     in

     agreei

    to veto any Board action in exchange for the ABC Coalition's promise to withdraw the ABC

    Ballot Measures

     and

     other

     value.

    144.  In order to prevent and resfrain a continuation of Defendant Dauner's

     unlawful activity

    and

     gross

     abuse of

     authority,

     wdiich in the

     absence

     of injunctive

     relief

     is likely to occur, CFC is

    entitied

     to permanent injunctive relief and Defendant

     Dauner

     must be removed bom his

     office

     

    Director

     and Co-Chair.

    V.  P RA YER FOR

      RELIEF

    WHEREFORE,

     Plaintiff

     prays

     that this Court award

     it

     the

     following

     relief:

    1.

      Damages

     in an

     amount

     to be determined at

     trial;

    2.

      Interest

     on all sums

     awarded;

     ROGER &

    ROSENFELD

     Praieslonsl OnpoEBtloo

    Vilbc Pirinny. SuJh 300

    AboMdi. CiliTimU MSOl

    010)337.1001

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    . ROSENFELD

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     337.1001

    3.

      Reformation

     of CFC's Bylaws to remove the

     veto

     power of the Co-Chairs and t

    decouple the position of Co-Chair from the Presidency of CHA;

    4. Injunctive relief

     ordering Dauner

     to

     resign from

     his

     position

     as

     Co-Chafr

     and

    Director

     of

     CFC;

     and

    5.

      Such

     other and

     fiirther

     relief as the Court

     deems proper.

    Dated:

     November 24,2015

    By:

    WEINBERG, ROGER

     &

     ROSENFELD

    A Professional Corporation

    BRUCE A.

     HARLAND

    EMILY

     P. RICH '

    MICHAEL D. BURSTEIN

    Attomeys for Plaintiff

     SEIU,

      UNITED

    HEALTHCARE W ORKERS

     -

      WEST, on its own

    behalf and on behalf

     of

     CARING FOR

    CALIFORNIANS,

      LLC

    23

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     ROGER

     &

    ROSENFELD

     PntesioDal

     CcBpooUon

     PUknr,  S D R

    300

    AbnM^

     CilUinla 94501

    StO) 337-1001

    DEMAND

     FOR JURY

     TRIAL

    Plaintiff Service

     Employees

     Intemational

     Union,

     United

     Healthcare

     Workers - West

    hereby demands a

     jury trial on all issues and

     causes of

     action.

    Dated: November

     24,2015

    By:

    WEINBERG,

     ROGER

     &

     ROSENFELD

    A Professional

     Corporation

    BRUCE A .

     HARLAND

    EMILY

     P. RICH

    MICHAEL

     D. BURSTEIN

    Attomeys

     for Plaintiff SEIU,

     UNITED

    HEALTHCARE WORKERS

     -

     WEST, on its ow

    behalf and on behalf of

     CARING

     FOR

    CALIFORNIANS, LLC

    24

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    GDSSC COV^^^SOHT