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DURIE TANG RI LLP MICHAEL J. PROCTOR (SBN 148235) [email protected] ALLYSON R. BENNETT (SBN 302090) [email protected] 953 East 3rd Street Los Angeles, CA 90013 Telephone: 213-992-4499 Facsimile: 415-236-6300

DURIE TANGRI LLP DARALYN J. DURIE (SBN 169825) [email protected] RAGESH K. TANGRI (SBN 159477) [email protected] ADAM R. BRAUSA (SBN 298754) [email protected] GALIA Z. AMRAM (SBN 25055 l) [email protected] AARON J. BENMARI( (SBN 312880) [email protected] 217 Leidesdorff Street San Francisco, CA 94111 Telephone: 415-362-6666 Facsimile: 415-236-6300

Attorneys for Defendant CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM

(Additional counsel continued onfol!mFing page)

SUPERIOR COURT OF THE STATE OF CALIFORNIA

FOR THE COUNTY OF LOS ANGELES

HOLLY WEDDING, ct al.,

Plaintiffs,

v.

CALIFORNIA PUBLIC EMPLOYEES' RETrREMENT SYSTEM, et al.,

Defendants.

Judicial Council Coordination Proceeding No. 4936

Case No. BC517444

CLASS ACTION

Assigned for all purposes to the Honorable William F. Highberger-Dept. SSlO

[Filing Fees exempt pursuant to Gov't Code§ 6103]

CLASS ACTION SETTLEMENT AGREEMENT AND RELEASE

CLASS ACTION SETTLEMENT AGREEMENT AND RELEASE I CASE NO. SCSI 7444

SHERNOFF BIDART ECHEVERRIA LLP Michael J. Bidart (SBN 060582)

2 [email protected] Steven M. Schuetze (SBN 143778)

3 [email protected] Kristin E. Hobbs (SBN 277843)

4 [email protected] 600 South Indian Hill Boulevard

5 Claremont, California 91711 Telephone: 909-621-493 5

6 Facsimile: 909-625-6915

7 BENTLEY & MORE, LLP Gregory L. Bentley (SBN 15114 7)

8 [email protected] Clare H. Lucich (SBN 287157)

9 [email protected] Matthew W. Clark (SBN 273950)

l 0 [email protected] 4931 Birch Street

11 Newport Beach, California 92660 Telephone: 949-254-0226

12 NELSON & FRAENKEL LLP

13 Gretchen M. Nelson (SBN 112566) [email protected]

14 Gabriel S. Barenfeld (SBN 224146) [email protected]

15 60 l So. Figueroa Street, Suite 2050 Los Angeles, CA 90017

16 Telephone: 213-622-6469 Facsimile: 213-622-6019

17 KE RS HAW, COOK & TALLEY PC

18 Stuaii C. Talley (SBN 180374) [email protected]

19 401 Watt Avenue Sacramento, CA 95864

20 Telephone: 916-779-7000 Facsimile: 916-721-2501

21 Attorneys for P!aint(/fs and the Class

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CLASS ACTION SETTLEMENT AGREEMENT AND RELEASE I CASE NO. BCS 17444

This CLASS ACTION SETTLEMENT AGREEMENT AND RELEASE ("Settlement

2 Agreement") is entered into by and between Plaintiffs Holly Wedding, Richard M. Lodyga, and Eileen

3 Lodyga, individually and on behalfof the Settlement Class (as defined below), and Defendant California

4 Public Employees' Retirement System ("CalPERS"). This Settlement Agreement is conditioned upon

5 and subject to approval of the Court as required by Rule 3.769 of the California Rules of Court. Class

6 Counsel (as defined below) and the Parties hereby stipulate and agree that all causes of action and

7 matters raised by Plaintiffs, individually and on behalf of the Settlement Class, and related to this lawsuit,

8 captioned Holly Wedding, et al. v. California Public Employees' Retirement System, an agency of the

9 State of Ca!if<Jrnia, et al., Case No. BCS 17444, in the Superior Court for the State of California for the

10 County of Los Angeles, are hereby settled and compromised on the terms and conditions set forth in this

11 Settlement Agreement and the releases set forth herein.

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DEFINITIONS

Capitalized Te1111s in this Agreement are defined herein as follows:

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1.2

1.3

"Action" means the lawsuit, currently captioned Holly Wedding, et al. v. California Public

Employees' Retirement System, an agency of the State of California, et al., Case No.

BC5 l 7 444, Clmently pending in the Superior Court for the State of California for the

County of Los Angeles.

"Additional Premiums" means the additional premiums paid by a Settlement Class

Member for their CalPERS LTC Policy as a result of the Challenged Increase, i.e., the

difference between the premiums that a Settlement Class Member actually paid and the

premiums that the Settlement Class Member would have paid absent the Challenged

Increase.

"Award Aclmowledgement Form" means the form to be sent to Settlement Class

Members by the Settlement Administrator with the Class Notice that may be returned by

the Participating Settlement Class Members confirming the information contained in the

Individual Settlement Award Form, selecting any options that may be available for a

Replacement LTC Policy, confirming and acknowledging the Surrender of the Settlement

Class Member's CalPERS LTC Policy upon the Final Settlement Date and confirming and

2 CLASS ACTION SETTLEMENT AGREEMENT AND RELEASE I CASE NO. BCS l 7444

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1.4

1.5

1.6

1.7

acknowledging the obligation to continue to pay premiums to CalPERS until the Final

Settlement Date. The Award Aclrnowledgement Form shall be in substantially the form

as Exhibit A-3 1, hereto.

"CAF Fund" means a Contingency/Administration/Fee Fund in an amount up to $282.5

million to be paid into the Settlement Account for payment of Settlement Administration

Expenses, Class Counsels' Fees and Expenses, and Plaintiffs' Service Awards. In

addition, no more than $150 million may be deducted or refunded from the CAF Fund for

any Contingency Cost.

"CalPERS L TC Policy" or "CalPERS LTC Policies" means: CalPERS L TC 1 and LTC2

policies held by Settlement Class Members, including policies that were terminated (i.e.,

tlu·ough Lapse or death) after the approval of the Challenged Increase, but not including

policies that were converted to LTC3 policies prior to the implementation of the

Challenged Increase. CalPERS LTC Policies shall include all applications, schedules,

riders, or other forms specifically made a part of the policies at the time of their issue, plus

all riders and amendments issued thereafter.

"Challenged Increase" means the 85% rate increase for certain LTCl and LTC2 CalPERS

policyholders that was adopted by CalPERS in October 2012, announced in February

2013 and implemented beginning in 2015.

"Claims" means all suits, claims, cross-claims, counter-claims, controversies, liabilities,

demands, obligations, debts, indemnities, costs, fees, expenses, losses, liens, actions, or

causes of action (however denominated), including Unknown Claims, of every nature,

character, and description, whether in law, contract, statute or in equity, direct or indirect,

whether known or unknown, foreseen or not foreseen, accrned or not yet accrued, or

present or contingent, for any injury, damage, obligation, or loss whatsoever, including

but not limited to compensatory damages, statutory liquidated damages, exemplary

1 The Preliminary Approval Order is attached to this Agreement as Exhibit A. That Order further attaches Exhibits 1-20, which includes various Fo1111s, Notices, and other documents referenced herein. References to exhibits attached to the Preliminary Approval Order are thus delineated as "A-[]."

3 CLASS ACTION SETTLEMENT AGREEMENT AND RELEASE I CASE NO. BCSl 7444

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1.8

1.9

damages, punitive damages, losses, costs, expenses or attorneys' fees.

"Class Counsel" means Shernoff Bidart Echeverria LLP, Kershaw, Cook & Talley PC,

Nelson & Fraenkel LLP, and Bentley & More LLP, individually and collectively, the

attorneys appointed by the Court to serve as Class Counsel.

"Class Counsels' Fees and Expenses" means the amount of the award approved by the

Comito be paid to Class Counsel from the Total Settlement Amount for attorneys' fees

and reimbursement of Class Counsels' costs and expenses.

1.10 "Class List" means the CalPERS LTC Policies identified by policy number and attached

to this Agreement as Exhibit D.

1.11 "Class Notice" means the notice of the Settlement approved by the Court to be sent by the

Settlement Administrator, as described in Section 5.3, to the persons on the Notice List.

The Parties will submit the Class Notice substantially in the form attached to this

Agreement as Exhibit A-1 for the Court's approval.

1.12 "Class Website" means the website set up by the Settlement Administrator containing

relevant information regarding the Settlement.

1.13 "Contingency Cost" means the combined amount of the Late Opt-Out Cost and the

Margin Cost.

1.14 "Court" means the Superior Court for the State of California for the County of Los

Angeles, Hon. William F. Highberger, or such other judge of that Comi as to which the

Action may hereafter by assigned, which court is presiding over the Action.

1.15 "Current Policyholder" means a Settlement Class Member who has not allowed their

CalPERS L TC Policy to Lapse and who is not On Claim.

1.16 "Defendant" or "CalPERS" means California Public Employees' Retirement System.

1.17 "Fairness Hearing" means any hearing held by the Court on any motion(s) for final

approval of the Settlement Agreement for purposes of: (i) entering the Order and

Judgment; (ii) determining whether the Settlement Agreement should be approved as fair,

reasonable, adequate and in the best interests of the Settlement Class Members; (iii) ruling

upon an application by Class Counsel for attorneys' fees and reimbursement of expenses


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and reasonable service award payments for the Plaintiffs; and (iv) ruling on any other

matters raised or considered.

1.18 "Final Approval Date" means the date on which the Court enters its Order and Judgment

approving the Settlement Agreement.

1.19 "Final Settlement Award" means the payment to each Paiiicipating Settlement Class

Member as outlined in Sections 2.2 and 2.16 below.

1.20 "Final Settlement Category" or "Final Settlement Categories" means the category, as of

the Final Settlement Date, that a Participating Settlement Class Member falls into for the

purposes of determining the Final Settlement Award.

1.21 "Final Settlement Date" means the date on which the Order and Judgment becomes final,

which shall be the latest of: (i) the date of final affirmance on any appeal of the Order and

Judgment (including both appeals as of right and discretionary review); (ii) the date of

final dismissal with prejudice of the last pending appeal from the Order and Judgment; or

(iii) if no appeal is filed, the expiration of the time for filing or noticing any form of valid

appeal from the Order and Judgment.

1.22 "Final Settlement List" means the list provided to CalPERS and Class Counsel by the

Settlement Administrator that identifies all Settlement Class Members who have

submitted a timely Request for Exclusion and all Potential Late Opt-Outs.

1.23 "Individual Settlement Award Form" means the form to be sent by the Settlement

Administrator with the Class Notice informing Settlement Class Members of the amount

of their Settlement award based on their Initial Settlement Category. Included within this

definition are the Individual Award Acknowledgment and Election Form (attached hereto

as Exhibit A-3), Individual Award Form (attached hereto as Exhibits A-6, A-8, and A-18),

the Lapse Claim Forms (attached hereto as Exhibits A-10 and A-12), and the Estate

Award Forms (attached hereto as Exhibits A-14 and A-16). All versions of the Individual

Settlement Award Forms shall be in substantially the form as the Exhibits identified

previously.

1.24 "Initial Settlement Administration Expenses" shall mean Settlement Administration


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Expenses incurred before the Final Settlement Date.

1.25 "Initial Settlement Category" means the category, as of the Preliminary Approval Date,

that a Settlement Class Member would fall into for purposes of determining the Final

Settlement Award if that determination were being made as of the Preliminary Approval

Date.

1.26 "Lapse" means that the coverage provided under a Settlement Class Member's CalPERS

LTC Policy has terminated as a result of the Settlement Class Member's failure to pay

premiums pursuant to the terms of their Ca!PERS LTC Policy or as a result of the

Settlement Class Member's affirmative action to cancel their CalPERS LTC Policy.

1.27 "Lapse Claim Form" means the form which Participating Settlement Class Members must

submit to the Settlement Administrator to confirm that they allowed their CalPERS LTC

Policy to Lapse as a result of the Challenged Increase. The Lapse Claim Form shall be in

substantially the forms as Exhibits A-10 and A-12 hereto.

1.28 "Late Election Form" means the form for Participating Settlement Members who go on

Claim between the Preliminary Approval Date and the Final Settlement Date that the

Participating Settlement Member fills out to identify whether the Participating Settlement

Class Member elects to retain their CalPERS LTC Policy or to obtain the benefits due

based on the Participating Settlement Class Member's Initial Settlement Category. The

Late Election Form shall be in substantially the form as Exhibit A-20 hereto.

1.29 "Late Opt-Out(s)" means any and all Settlement Class Members who, pursuant to Section

7 below, after the Final Settlement Date seek exclusion from the Settlement Class and

who are found by the Mediator to be entitled to be excluded from the Settlement Class.

1.30 "Late Opt-Out Cost" shall mean that amount of money sufficient to offset the actuarial

cost of Late Opt-Outs, as described in Sections 2.15 and 7.4 below.

1.31 "Long Term Care Fund" means the fund established by CalPERS that provides benefits

for those individuals who purchased any of CalPERS' Long Term Care policies.

1.32 "L TC Fund Margin" means the metric that CalPERS uses, including in its annual

valuation reports, to report the current financial status of CalPERS' L TC


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Program. CalPERS will calculate the LTC Fund Margin for purposes of this Settlement

Agreement using the same methodology that it uses in the ordinary course of its business,

which includes periodic changes in actuarial assumptions based on experience that are

conducted in the normal course of business.

1.33 "Margin Cost" means an amount sufficient to cause the L TC Fund Margin, following

payment of the Total Settlement Award, to be equivalent to the LTC Fund Margin prior to

the implementation of the Settlement Agreement or l 0%, whichever is lesser.

1.34 "Mediator" means the Hon. Layn R. Phillips (Ret.) with Phillips ADR Enterprises, P.C. If

Judge Phillips is unavailable to perform the duties given to the Mediator under Sections

2.14, 2. J 5, 2.18, 7, and 19 of this Agreement, the "Mediator" shall mean (for the purposes

of those sections only), whichever person the Parties agree upon or, if the Parties are

unable to reach agreement, the person appointed by the Court to perform the Mediator's

duties.

1.35 "Notice Date" means the date on which the Settlement Administrator mails the Class

Notice, or, if the Administrator mails the Class Notice on more than one date, the date on

which the Administrator mails the Class Notice that is latest in time.

1.36 "Notice List" means those individuals, along with their addresses, that are reflected in

Defendant's records as the last known policy owners of the CalPERS LTC Policies on the

Class List. The Notice List shall identify the name of each Settlement Class Member, all

contact information that the CalPERS LTC program has for each Settlement Class

Member, the policy number for the Settlement Class Member, the date that Settlement

Class Member began paying premiums for their CalPERS LTC Policy, the Initial

Settlement Category into which each Settlement Class Member falls, and the Final

Settlement Award each Settlement Class Member would receive from the Settlement if

the Settlement were final on the date the Notice List is created. If the Settlement

Administrator is unable to contact any Settlement Class Member, CalPERS shall add to

the Notice List, upon request by the Settlement Administrator, the social security number

for Settlement Class Members who the Settlement Administrator is not able to contact.

7 CLASS ACTION SETTLEMENT AGREEMENT AND RELEASE I CASE NO. BCS 17444

1.37 "On Claim" means the individual is currently collecting benefits under their CalPERS

2 L TC Policy or has exhausted benefits under their CalPERS LTC Policy but is still

3 receiving the type of medical care or treatment that would otherwise qualify for benefits

4 under their CalPERS L TC Policy.

5 1.38 "Order and Final Judgment" means the (i) Court's Order Granting Final Approval to Class

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Action Settlement, and (ii) Final Judgment on Class Action Settlement Between Plaintiffs

and California Public Employees' Retirement System. The Final Judgment on Class

Action Settlement Between Plaintiffs and California Public Employees' Retirement

System shall incorporate the terms of the Settlement in accordance with California Rules

of Court 3.769 and 3.771. Pursuant to California Rule of Court 3.769(h), after granting

final approval of the Settlement, the Court shall retain jurisdiction over the Parties to

enforce the terms of the Order and Final Judgment. The Parties will submit proposed

forms of the Order Granting Final Approval to Class Action Settlement and the Final

.Judgment on Class Action Settlement Between Plaintiffs and California Public

Employees' Retirement System substantially in the fonns attached to this Agreement as

Exhibit B (the Final Approval Order) and Exhibit C (the Final Judgment for the Court's

approval.

18 1.39 "Participating Settlement Class Member" means any Settlement Class Member who does

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not opt out of the Settlement by submitting (a) a timely Request for Exclusion pursuant to

Section 6.1 or (b) a Late Opt-Out Application that is granted by the Mediator pursuant to

Section 7 below.

22 1.40 "Parties" means, collectively, Plaintiffs and Defendant.

23 1.41 "Plaintiff' or "Plaintiffs" means Holly Wedding, Richard M. Lodyga, and Eileen Lodyga,

24 individually and collectively, and as representatives of the Settlement Class, and their

25 assigns, successors-in-interest, representatives, employees, managers and members.

26 1.42 "Plaintiffs' Service Award(s)" means the amount of any award approved by the Court to

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be paid to Plaintiffs from the Total Settlement Amount, in addition to any settlement relief

the Plaintiffs may be eligible to receive, as compensation for efforts undertaken by them


on behalf of the Settlement Class.

2 1.43 "Preliminary Approval Date" means the date on which the Court enters the Preliminary

3 Approval Order.

4 1.44 "Preliminary Approval Order" means the [Proposed] Order Granting Preliminary

5 Approval of Class Action Settlement substantially in the form attached to this Settlement

6 Agreement as Exhibit A and as approved by the Court.

7 1.45 "Released Claims" means any and all Claims that (a) were asserted in the Action, (b)

8 could have been asserted in the Action, ( c) hereafter may be asserted, and ( d) arise out of

9 or relate to the facts, transactions, events, occurrences, acts, disclosures, statements,

10 omissions, or failures to act concerning the Challenged Increase. Except as to the benefits

11 provided under the terms of this Settlement, "Released Claims" include the denial of

12 benefits to any Settlement Class Member while On-Claim if benefits are denied solely

13 because the Settlement Class Member has exhausted their benefits as a result of choosing

14 to reduce their benefits in response to the Challenged Increase. "Released Claims"

15 specifically do not include any claims arising from the denial of benefits to any Settlement

16 Class Member while On-Claim for any other reason.

17 1.46 "Released Parties" means, individually and collectively, the State of California,

18 Defendant, and Defendant's current and former agents, representatives, principals,

19 employees, independent contractors, attorneys, directors, board members, officers,

20 parents, fiduciaries, administrators, partners, creditors, insurance providers, subsidiaries,

21 divisions, affiliates, related entities, predecessors, successors and assignees.

22 1.47 "Releasing Parties" means each Plaintiff and Participating Settlement Class Member on

23 behalf of themselves and their respective agents, heirs, relatives, representatives,

24 attorneys, successors, trustees, subrogees, executors, assignees, and all other persons or

25 entities acting by, through, under, or in concert with any of them purporting to claim on

26 their behalf. Releasing Parties does not include any Settlement Class Member who timely

27 and validly requests exclusion from the Settlement Class, including any Late Opt-Outs.

28 1.48 "Request for Exclusion" means a request for exclusion from the Settlement by Settlement


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Class Members that is to be sent by Settlement Class Members to the Settlement

Administrator by the Response Deadline, pursuant to Section 6.1 of this Agreement. The

Award Acknowledgment Form will include a section whereby Settlement Class Members

may make a Request for Exclusion. Settlement Class Members may use that form or may

otherwise submit a Request for Exclusion in another form sufficient to provide the

information necessa1y to inform the Settlement Administrator of the Settlement Class

7 Members decision to request exclusion.

8 1.49 "Replacement L TC Policy" means a long-term care policy that is not offered by CalPERS

9 that Settlement Class Members may have the option of purchasing to replace their

10 CalPERS LTC Policy.

11 1.50 "Response Deadline" means the date no later than 120 calendar clays from the Notice

12 Date.

13 1.51 "Settlement" means all terms of the settlement set forth in this Settlement Agreement.

14 1.52 "Settlement Account" means the bank account established by the Settlement

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Administrator pursuant to the terms of this Settlement Agreement from which all monies

payable under the terms of the Settlement shall be paid, as set forth herein. The

Settlement Account is intended to be a "qualified settlement fund" ("Qualified Settlement

Fund" or "QSF") within the meaning of Treasury Regulation § 1.468B- l. The Settlement

Administrator, within the meaning of Treasury Regulation § l .468B-2(k)(3 ), shall be

responsible for filing tax returns for the Total Settlement Amount and paying from the

Qualified Settlement Fund any taxes owed with respect to the Settlement Account. The

Parties hereto agree that the Settlement Account shall be treated as a "qualified settlement

fund" from the earliest elate possible, and agree to any relation-back election required to

treat the Settlement Account as a "qualified settlement fund" from the earliest date

possible. Defense Counsel agree to provide promptly to the Settlement Administrator the

statement described in Treasury Regulation§ 1.468B-3(e), if necessary. All taxes on any

interest earned by money in the Settlement Account shall be paid out of the Settlement

Account, out of the interest earned on the Settlement Account, and shall be considered to


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be a cost of administration of the Settlement, and be timely paid by the Settlement

Administrator without prior order of the Court, and under no circumstance shall

Defendants have any tax liability related to the Settlement or the Settlement Account. All

funds held in the Settlement Account and all earnings thereon shall be deemed to be in

custodia legis of the Court and shall remain subject to the jurisdiction of the Court until

such time as the funds shall have been disbursed pursuant to the terms of the Settlement

Agreement or further order of the Court. The Settlement Account shall be established

under terms acceptable to Plaintiffs and Defendant at a financial institution with more than

$20 billion in an account or accounts insured by an agency or agencies of the United

States government, with insurance that exceeds any amounts deposited therein, for use in

the Settlement to facilitate the effectuation and payment of consideration paid to

Participating Settlement Class Members, Settlement Administration Expenses, Plaintiffs'

Service Awards, and Class Counsels' Fees and Expenses. The Settlement Administrator

may only use the funds paid by the Defendant into the Settlement Account as specified in

and consistent with the terms of the Settlement Agreement and pursuant to an Order of the

Court. Further, for the avoidance of doubt, any expenses or fees associated with or caused

by the setting up of and/or maintenance of the Settlement Account shall be paid as

Settlement Administration Expenses.

"Settlement Administration Expenses" means all fees, costs, and expenses incurred by the

Settlement Administrator, including but not limited to Class Notice costs, settlement and

claims administration, and costs associated with the Settlement Account, including costs

associated with or caused by the setting up of and/or maintenance of the Settlement

Account. Settlement Administration Expenses shall also include costs associated with

charges from the Long Tenn Care Group for its services in providing data and other

information to Class Counsel for litigation and/or settlement purposes, as well as up to

$200,000 in expenses incurred by the Long Term Care Group in connection with the

hiring of additional people to answer phone calls from members of the Settlement Class

related to their existing policies prompted by the Class Notice. Settlement Administration

1 I CLASS ACTION SETTLEMENT AGREEMENT AND RELEASE I CASE NO. BCS t 7444

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Expenses also include any fees, costs, and expenses incurred by the Mediator pursuant to

Sections 2.14, 2.15, 2.18, 7, and 19 below. All Settlement Administration Expenses shall

be paid from the Total Settlement Amount.

1.54 "Settlement Administrator" means the entity appointed by the Court to send notice to the

Settlement Class and administer the Settlement as referenced herein.

1.55 "Settlement Agreement" means this Class Action Settlement Agreement and Release.

1.56 "Settlement Class" means: any individual who was a California citizen in February 2013,

and who purchased LTC 1 and LTC2 policies that included the inflation protection benefit

and were subjected to the Challenged Increase. Policyholders who converted their

policies to LTC3 policies prior to the implementation of the Challenged Increase are not

included in the Settlement Cl ass, even if the conversion occurred after the Challenged

increase was approved in October 2012. The Settlement Class does not include those

individuals who opted out of the Class certified by the Court on January 28, 2016 and who

are identified on Exhibit E hereto.

1.57 "Settlement Class Member(s)" means all persons who are in the Settlement Class.

1.58 "Surrender" means that the Participating Settlement Class Member is giving up any and

all contractual and other rights arising under or relating to, in whole or in part, their

CalPERS LTC Policy. For the sake of clarity, Participating Settlement Class Members

who Surrender their CalPERS L TC Policies shall no longer have an LTC Policy with

CalPERS and CalPERS shall have no further obligations under the policy issued by

CalPERS to that Participating Settlement Class Member or liability based on it.

1.59 "Total Settlement Amount" means the amount to be calculated pursuant to the tenns of

Sections 2.2 and 2.8-2.12 below to be consideration paid by Defendant out of its Long

Term Care Fund for the benefit of the Participating Settlement Class Members, including

the CAF Fund. The Total Settlement Amount will be used to pay: (i) any and all

settlement relief to Participating Settlement Class Members; (ii) Settlement

Administration Expenses, (iii) Plaintiffs' Service Awards; (iv) Class Counsels' Fees and

Expenses; and (iv) any Late Opt-Out Costs. Defendant shall have no financial obligations


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under this Settlement Agreement or the Settlement other than payment of the Total

Settlement Amount. The Total Settlement Amount, less any amount associated with the

Margin Cost, shall be deposited by Defendant into the Settlement Account in accordance

with Section 2.1.

1.60 "Unknown Claims" means any claims asserted, that might have been asserted or that

hereafter may be asserted arising out of the facts, transactions, events, occurrences, acts,

disclosures, statements, omissions, or failures to act that were alleged in the Action with

respect to the Released Claims that Plaintiffs or any Paiiicipating Settlement Class

Member does not know or suspect to exist in their favor at the time of the entry of the

Order and Judgment, and which if known by them might have affected their decision to

opt out of or object to the Settlement.

1.61 The terms "they" or "their" shall also mean "he or she" and "his or her" or "it" or "its,"

where applicable. "Person" includes individuals and entities. Defined terms expressed in

the singular also include the plural form of such tern1, and vice versa, where applicable.

1.62 All references herein to Sections refer to the Sections and paragraphs of this Settlement

Agreement, unless otherwise expressly stated in the reference.

SETTLEMENT RELIEF

2.1 CalPERS agrees that, in exchange for: (i) entry of the Order and Judgment; (ii) the release

of claims provided pursuant to Section 9; and (iii) the conditions set forth in Section 2.2

for Settlement Class Members who fall under Category A, including the Surrender of

policies, it will, (a) within 30 days of the Final Settlement Date deposit into the Settlement

Account the amount required for the CAF Fund, pursuant to the provisions of Sections

2.8, 2.10 and 2.12, and (b) within 90 days of the Final Settlement Date, pay the Total

Settlement Amount into the Settlement Account, less any amount previously deposited

into the Settlement Account.

2.2 The Total Settlement Amount shall be inclusive of all settlement payments to

Participating Settlement Class Members, Class Counsels' Fees and Expenses, Plaintiffs'

Service Awards, and Settlement Administration Expenses. The payments to Participating


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Settlement Class Members included in the Total Settlement Amount shall be based on the

settlement structure outlined below and shall be calculated as follows:

FINAL SETTLEMENT CATEGORY PAYMENTS TO PARTICIPATING

SETTLEMENT CLASS MEMBERS

CATEGORY A. Participating Settlement Pa1iicipating Settlement Class Members

Class Members who are Current who, on the Final Settlement Date, are

Policyholders and who are not on claim on Current Policyholders and who are not On

the Final Settlement Date Claim shall receive a refund equivalent to

all premiums paid to CalPERS for their

CalPERS L TC Policy from the inception

of the policy through the Final Settlement

Date, less any benefits paid under the

CalPERS L TC Policy. Each Participating

Settlement Class Member in this Final

Settlement Category shall receive a

minimum payment of no less than

$10,000. Participating Settlement Class

Members in this Final Settlement

Category shall Surrender their CalPERS

LTC Policy upon payment of this refund.

In the alternative, Participating Settlement

Class Members in this Final Settlement

Category shall be entitled to apply their

premium return to any available

Replacement L TC Policy.

CATEGORY B. Participating Settlement Participating Settlement Class Members

Class Members who are On Claim both on who paid any part of the Challenged


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the Notice Date and the Final Settlement Increase and are On Claim both on the

Date and who paid the Challenged Notice Date and on the Final Settlement

lncrease Date, shall receive a refund equivalent to

all Additional Premiums paid before going

On Claim. Participating Settlement Class

Members in this Final Settlement

Category are not required to Surrender

their CalPERS L TC Policy and shall

maintain all benefits and contractual rights

available under their CalPERS LTC

Policy, except those expressly Released

under this Settlement Agreement.

CATEGORY C. Participating Settlement Pa1iicipating Settlement Class Members

Class Members who are On Claim both on who, on both the Notice Date and the

the Notice Date and the Final Settlement Final Settlement Date, are On Claim but

Date and who reduced benefits as a result reduced their benefits as a result of the

of the Challenged Increase. Challenged Increase before going On

Claim, shall receive an additional one (1)

year of benefits based on their Schedule of

Benefits (as defined in their CalPERS

LTC Policy) as of the Final Settlement

Date. In addition, Participating Settlement

Class Members in this Final Settlement

Category who paid any part of the

Challenged Increase before reducing

benefits shall also receive a refund equal

to all Additional Premiums paid.


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Paiiicipating Settlement Class Members in

this Final Settlement Category are not

required to Surrender their CalPERS LTC

Policy and shall maintain all benefits and

contractual rights available under their

CalPERS LTC Policy, except those

expressly Released under this Settlement

Agreement.

CATEGORY D. Participating Settlement Participating Settlement Class Members

Class Members who let their CalPERS who let their CalPERS LTC Policy Lapse

LTC Policy Lapse between February l, between February 1, 2013 and December

2013 and December 31, 2014. 31, 2014, and who submit a claim form

stating under penalty of pe1jury that they

let their policy lapse as a result of the

Challenged Increase shall receive a refund

equivalent to one-half (\12) of all premiums

paid to CalPERS for their CalPERS LTC

Policy from the inception of their

CalPERS L TC Policy through the date

their Cal PERS L TC Policy Lapsed, less

any amounts paid in benefits under their

CalPERS L TC Policy.

CATEGORY E. Participating Settlement Participating Settlement Class Members

Class Members who let their CalPERS who let their CalPERS L TC Policy Lapse

LTC Policy Lapse between January 1, between January 1, 2015 and the Final

2015 and the Final Settlement Date Settlement Date and who submit a claim

form stating under penalty of perjury that


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they let their CalPERS LTC Policy lapse

as a result of the Challenged Increase will

receive all Additional Premiums paid or

$2,500, whichever is greater.

CATEGORY F. Participating Settlement The estates of Participating Settlement

Class Members who passed away after Class Members who ( 1) died after

February 1, 2013 and before the Final February 1, 2013 and before the Final

Settlement Date, and who reduced benefits Settlement Date, (2) were Current

as a result of the Challenged Increase. Policyholders or were On Claim at the

time of their death, and (3) reduced their

benefits as a result of the Challenged

Increase shall receive all Additional

Premiums paid or $2,500, whichever is

greater.

CATEGORY G. Participating Settlement The estates of Participating Settlement

Class Members who passed away after Class Members who (1) died after

February 1, 2013 and before the Final February 1, 2013 and before the Final

Settlement Date, and who paid the Settlement Date, (2) were Current

Challenged Increase and never reduced Policyholders or were On Claim at the

benefits in response to the Challenge time of their death, (3) paid the

Increase. Challenged Increase, and ( 4) never

reduced their benefits in response to the

Challenged Increase shall receive all

Additional Premiums paid.

CATEGORY H. Participating Settlement Participating Settlement Class Members

Class Members who paid the Challenged who paid the Challenged Increase, who

Increase, went On Claim, and exhausted went On Claim at any time before the

17 CLASS ACTION SETTLEMENT AGREEMENT AND RELEASE I CASE NO. BCSJ 7444

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their benefits before the Final Settlement Final Settlement Date, and exhausted their

Date benefits before the Final Settlement Date,

shall receive a refund of all Additional

Premiums paid.

CA TE GORY I. Participating Settlement Participating Settlement Class Members

Class Members who are Cunent who are Current Policyholders who were

Policyholders who were not On Claim as not On Claim as of the Notice Date, but

of the Notice Date but are On Claim as of are on Claim as of the Final Settlement

the Final Settlement Date Date must submit an election pursuant to

Section 5. 7 stating whether the

Paiiicipating Settlement Class Member

chooses to (a) Surrender their CalPERS

LTC Policy, or (b) keep their CalPERS

LTC Policy in place. If the Participating

Settlement Class Member elects to keep

their CalPERS LTC Policy in place or

makes no election, the Participating

Settlement Class Member shall receive no

relief under the Settlement and shall

maintain all benefits and contractual rights

available under their CalPERS LTC

Policy, except those expressly Released

under this Settlement Agreement. If the

Participating Settlement Class Member

elects to Surrender their CalPERS LTC

Policy, Defendant shall pay into the

Settlement Fund, and the Paiiicipating


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2.3

2.4

Settlement Class Member shall receive, an

amount equivalent to a refund of all

premiums paid (less benefits received),

with a $10,000 mandatory minimum.

The Final Settlement Categories above shall be determined as follows: Within 60 days of

the Final Settlement Date, CalPERS shall submit to the Settlement Administrator an

updated list of all Pa1iicipating Settlement Class Members, the Final Settlement Category

they fall into, and a calculation of their Final Settlement Awards. The list shall be cuiTent

as of the Final Settlement Date and include all premiums paid by the Participating

Settlement Class Member up through that date. To the extent the deadline for

Participating Settlement Class Members who fall into Category I to submit their Late

Election Forms pursuant to Section 5.7 has not yet passed at the time that CalPERS is

creating the list, CalPERS shall consider Participating Settlement Class Members who

have not yet returned their Late Election Forms to have elected to retain their CalPERS

LTC Policies. If the Settlement Administrator subsequently receives a timely Late

Election Form from a Participating Settlement Class Member who falls into Category I,

CalPERS shall deposit into the Settlement Account any additional money owed under this

Settlement Agreement as a result of the election of that Participating Settlement Class

Member, within 45 days of the deadline for the submission of Late Election Forms.

To the extent any Participating Settlement Class Member disputes their Final Settlement

Category or Final Settlement Award, they may submit their dispute to the Settlement

Administrator within thirty (30) days of the mailing of their settlement check. The

Settlement Administrator will have the sole authority to resolve any disputes regarding the

Final Settlement Category or Final Settlement Award of the Participating Settlement Class

Member. However, the Administrator shall provide copies of all disputes to counsel for

CalPERS and Class Counsel for review and response. If a Pa1iicipating Settlement Class


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2.5

2.6

2.7

Member's dispute is upheld, within 14 days of the Settlement Administrator issuing a

decision, CalPERS shall deposit into the Settlement Account any additional funds

required to be paid as a result of the resolution of the dispute.

Within 30 days after receiving the Total Settlement Amount, the Settlement Administrator

shall deliver to each Participating Settlement Class Member by U.S. mail, first-class

postage prepaid, a settlement check in the amount of the Final Settlement Award to which

they are entitled. Settlement checks will be automatically mailed without any fmiher

action on the part of the Participating Settlement Class Members, except that: (a)

settlement checks will be mailed to Participating Settlement Class Members in Categories

D and E above only if they submit a Lapse Claim Form, as described in Section 5.6

below, and (b) settlement checks will be mailed to Participating Settlement Class

Members who are Current Policyholders who were not On Claim as of the Notice Date

but are On Claim as of the Final Settlement Date only if they elect to Surrender their

CalPERS LTC Policies, as outlined in Section 5.7 below. For those Participating

Settlement Class Members who are Current Policyholders and are not On Claim and who

elect to purchase Replacement L TC Policies, CalPERS agrees to cooperate with plaintiffs

and the Administrator with respect to tbc transfer of funds to the appropriate entity.

Participating Settlement Class Members who are Current Policyholders and who are not

On Claim (Category A above) must continue to pay premiums to CalPERS up to the Final

Settlement Date, including any premium increases implemented by CalPERS, unless the

Participating Settlement Class Member elects to downgrade benefits in response to any

CalPERS premium increase. In all events, the Participating Settlement Class Member

must continue paying premiums no matter the amount of the premium up to the Final

Settlement Date. Within 5 days of the Final Settlement Date, the Settlement

Administrator shall send a letter to all Participating Settlement Class Members informing

them of the Final Settlement Date and advising the Participating Settlement Class

Members that they should no longer make any premium payments to CalPERS.

A Participating Settlement Class Member who is a Current Policyholder who is On Claim


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2.8

2.9

as of the Final Settlement Date (Categories B and C above) who subsequently goes off

claim without exhausting their benefits must pay premiums at the level required under

CalPERS's then-current rate table in order to retain their CalPERS LTC Policy.

In addition to the payments outlined in Section 2.2 above, and with the goal of attempting

to ensure that all Settlement Class Members make a knowing decision regarding this

Settlement, the Total Settlement Amount shall also include a CAF Fund.

Settlement Administration Expenses shall be paid from the CAF Fund. Subject to Court

approval and the provisions of Sections 2.10, 2.11 and 2.12, the CAF Fund shall also be

used to pay for (1) Contingency Costs; (2) Class Counsels' Fees and Expenses; (3) and

Plaintiffs' Service Awards.

2.10 Subject to Section 2.12, in determining the amount of the CAF Fund, Cal PERS may

deduct from the maximum $282.5 million the Margin Cost. The following are examples

of how this provision is to be applied. If, at the time the Margin Cost is calculated, the

LTC Fund Margin was 7% prior to the implementation of the Settlement Agreement, and

the implementation of the Settlement Agreement increased the LTC Fund Margin to 9%,

Ca!PERS would not be able to deduct funds from the CAF Fund to cover the Margin Cost

(although CalPERS could still use funds from the CAF Fund to cover the Late Opt-Out

Cost). If the L TC Fund Margin was 7% prior to the implementation of the Settlement

Agreement, and the implementation of the Settlement Agreement decreased the L TC Furrd

Margin to 6%, CalPERS would be able to deduct funds from the CAF Fund to increase

the LTC Fund Margin to 7°/o and further would be able to use funds from the CAF Fund to

cover the Late Opt-Out Cost. If the LTC Fund Margin was 12% prior to the

implementation of the Settlement Agreement, and the implementation of the Settlement

Agreement decreased the LTC Fund Margin to 6%, CalPERS would be able to deduct

funds from the CAF Fund to increase the L TC Fund Margin to 10% and in addition would

also be able to use funds from the CAF Fund to cover the Late Opt-Out Cost.

2.11 Subject to Section 2.12, CalPERS shall also have the right to have refunded from the CAF

Fund an amount of money sufficient to offset the Late Opt-Out Cost.


2.12 If the total Contingency Cost exceeds $150 million, CalPERS may only deduct and/or

2 have refunded from the CAF Fund a combined maximum of $150 million.

3 2.13 Even if the conditions required under Section 2. I 0 for Ca!PERS to deduct money from the

4 CAF fund are met, CalPERS may choose to exercise its rights to terminate the settlement

5 under Section 19, even if deducting money from the CAF Fund would be sufficient to

6 restore the LTC Fund Margin to 10%.

7 2.14 After CalPERS calculates the Margin Cost, CalPERS shall submit to Class Counsel its

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calculations. Any dispute between the Paiiies regarding the calculation of the Margin

Cost shall be submitted to the Mediator within 30 days of CalPERS 's submission of the

calculation to Class Counsel. The Mediator's decision shall be binding and non-

appealable.

12 2.15 At the conclusion of the Late Opt-Out adjudication process outlined in Section 7,

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CalPERS shall submit to Class Counsel its calculation of the Late Opt-Out Cost. Any

dispute between the Parties regarding the calculation of the Late Opt-Out Cost shall be

submitted to the Mediator, within 30 days of CalPERS's submission of the calculation to

Class Counsel. The Mediator's decision shall be binding and non-appealable. If there is

no dispute between the Parties regarding the calculation of the Late Opt-Out Cost, the

Settlement Administrator shall refund the Late Opt-Out Cost to the CalPERS L TC Fund

within 20 days of CalPERS's submission of the Late Opt-Out Cost to Class Counsel. If

there is a dispute between the Parties, the Settlement Administrator shall refund the

amount determined by the Mediator to be the Late Opt-Out Cost to CalPERS L TC Fund

within 20 days of the Mediator's detennination.

2.16 At the conclusion of the settlement administration process, outlined in Sections 2.5 and

2.15, and after payment of all of the above refunds, expenses, reimbursements, and fees

pursuant to Sections 2.9, 2.11, and 8, any amounts remaining in the CAF Fund shall be

apportioned to all Participating Settlement Class Members proportionately based on the

value of each Participating Settlement Class Member's payments received under this

Settlement Agreement. For example, if a Participating Settlement Class Member received


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a Final Settlement Award equal to .5% of the total consideration paid to Participating

Settlement Class Members, that Participating Settlement Class Member shall receive .5%

of any amounts remaining in the CAF Fund. If it would not be financially viable to

distribute funds remaining in the CAF Fund to Participating Settlement Class Members

because the amount is less than $10 per Participating Settlement Class Member, no

distributions shall be required and all amounts remaining in the Fund shall be distributed

to an appropriate Cy Pres recipient.

2.17 No later than three-hundred sixty-five (365) days after the conclusion of the distribution of

the Total Settlement Amount, the Settlement Administrator shall submit to the Court a

repori identifying all payments made to the Participating Settlement Class Members and

all checks issued to Participating Settlement Class Member that remain uncashed.

Thereafter, subject to Court approval, within 30 days after the report is filed with the

Court, a hearing shall be scheduled before the Court to confirm that the distribution of all

funds associated with any uncashed checks issued to Participating Settlement Class .

Members shall be made to the California State Controller's Unclaimed Money Fund with

such information as required by the State Controller to identify the beneficiary of the

funds.

2.18 To the extent the Court finds that the Settlement does not meet the standard for

preliminary or final approval, the Parties will negotiate in good faith to modify the

Settlement directly or with the assistance of the Mediator and endeavor to resolve the

issue( s) to the satisfaction of the Court.

PRELIMINARY AND FINAL APPROVAL

3.1 The Parties agree that Plaintiffs shall move for an order seeking preliminary approval of

the Settlement no later than July 12, 2021, for a hearing on July 22, 2021, at l 0:00 a.m. in

Department 10. Plaintiffs shall also move for an order: (i) certifying the Settlement Class;

and (ii) approving the Class Notice plan. Plaintiffs will share with CalPERS's counsel

drafts of the motions seeking preliminary and final approval of the Settlement, and all

other settlement-related filings (excluding Class Counsels' motion for Plaintiffs Service


Award and Class Counsels' Fees and Expenses), no less than five (5) days before they are

2 filed.

,., .) 3.2 Subject to approval by the Court, Defendant conditionally consents to certification of the

4 Settlement Class for settlement purposes only. Defendant agrees to class action treatment

5 of the claims alleged or potentially asserted solely for the purpose of effecting the

6 compromise and settlement of those claims on a class basis as set fo1ih in the Settlement

7 Agreement. If the Settlement Agreement is terminated pursuant to the provisions set forth

8 in this Section 19 or the Final Settlement Date does not occur for any reason, the Parties

9 will not offer this Settlement Agreement, any agreement negotiated between the Parties in

10 connection with or regarding the Settlement or the Settlement Agreement, or any motion

11 seeking approval of the Settlement or Settlement Agreement in connection with any

12 motion to decertify the class certified by the Court in its Order dated January 28, 2016, or

13 in any other proceeding in this Action or any other case or legal proceeding.

14 3.3 Class Counsel agrees to file a motion for final approval of the Settlement and an

15 Application for Plaintiffs' Service Award and Class Counsels' Fees and Expenses no later

16 than 16 court days before the Fairness I-fraring at which the Application will be heard.

17 4. SETTLEMENT ADMINISTRATOR

18 4.1 The Parties shall request contemporaneously with seeking preliminary approval that the

19 Court appoint the Settlement Administrator.

20 4.2 The Settlement Administrator shall establish the Settlement Account, and shall be

21 responsible for effectuating Class Notice and administering the Settlement Account

22 consistent with the terms of the Settlement Agreement.

23 5. NOTICE

24 5.1 Concurrent with the execution of this Settlement Agreement, CalPERS shall submit to

25 Class Counsel the Notice List. The Notice List shall be designated Confidential

26 Information pursuant to the Protective Order entered in the Action. Class Counsel shall

27 submit the Notice List to the Settlement Administrator only after the Settlement

28 Administrator agrees to be bound by the Protective Order. The Parties agree and


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understand that if more time is needed to prepare the Notice List, they will agree on another

date for delivering the Notice List to Class Counsel, unless otherwise ordered by the Court.

5.2 Subject to the requirements of any orders entered by the Comi, no later than 14 days after

the signing of this Settlement Agreement by all Paiiies, or three business days after the

Preliminary Approval Date, whichever is later, CalPERS shall deposit the sum of $900,000

with the Settlement Administrator to cover the cost of Class Notice and Initial Settlement

Administration Expenses. In the event that the Final Settlement Date never occurs,

CalPERS shall be entitled to a refund of all unexpended Settlement Administration

Expenses other than (i) any portion of the $900,000 deposited by CalPERS pursuant to this

Section spent by the Settlement Administrator on fnitial Settlement Administration

Expenses or (ii) any payments to the Long Term Care Group in connection with the Long

Term Care Group's hiring of additional people to answer phone calls from members of the

Settlement Class prompted by the Class Notice. In the event that the Initial Settlement

Administration expenses (other than expenses incurred by the Long Term Care Group)

exceed $900,000, Class Counsel shall deposit any additional amounts necessary into the

Settlement Account to cover the additional Initial Settlement Administration Expenses.

Should the Final Settlement Date occur, Class Counsel shall be reimbursed from the CAF

Fund for any Initial Settlement Administration Expenses that Class Counsel inctmed. If the

Final Settlement Date never occurs, all amounts spent by the Settlement Administrator on

Initial Settlement Administration Expenses in excess of the $900,000 deposited by

CalPERS shall be paid by Class Counsel.

5.3 No later than 10 days after the Co mi issues its Preliminary Approval Order, the Settlement

Administrator shall disseminate the Class Notice to all Settlement Class Members by

regular mail (and also by email to all Settlement Class Members whose email addresses are

known). The Class Notice shall contain the content and be substantially in the form as

attached hereto as Exhibit A-1 and shall be approved by the Court and shall advise

Settlement Class Members of (i) their rights to object to the Settlement under the

procedures and in accordance with the deadlines set by the Cowi, (ii) their rights to request

25 CLASS ACTION SETTLEMENT AGREEMENT AND RELEASE I CASE NO. BCSJ 7444

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exclusion from the Settlement under the procedures and in accordance with the deadlines

set by the Court ("Opt-Out"), and (iii) the specific release language that will be included in

the Order and Judgment that will be binding on them if the Settlement is approved. The

Class Notice shall include an Individual Settlement Award Fo1m. Based on their Initial

Settlement Category as determined from CalPERS' records, the Individual Settlement

Award Form shall provide each Settlement Class Member with the following information:

(1) the amount they will receive under the Settlement if their Initial Settlement Category

does not change prior to the Final Settlement Date and how that amount was calculated; (2)

the Settlement Class Member's current address and point of contact; (3) a statement that if

the Settlement Class Member is a Current Policyholder who is not on Claim they will

Surrender their CalPERS LTC Policy if they do not seek exclusion from the Settlement; ( 4)

options for the purchase of a Replacement LTC Policy, if any; and (5) a statement to

Settlement Class Members who are Current Policyholders who are not on Claim that they

must continue to pay premiums established by CalPERS for their CalPERS LTC policy

until the Final Settlement Date in order to retain the benefits of the Settlement.

For Settlement Class Members in Category A as defined in in Section 2.2 above, the Class

Notice will also include an Award Acknowledgement Form that will include language

asking (but not requiring) each Participating Settlement Class Member to (i) confirm the

information contained in the Award Form, (ii) select whether they would like any potential

Replacement LTC Policy in place or a premium refund, (iii) confinn and acknowledge the

Surrender of the Participating Settlement Class Member's LTC Policy with CalPERS upon

the Final Settlement Date, and (iv) confirm and acknowledge the obligation to continue to

pay premiums to CalPERS until the Final Settlement Date. The Settlement Administrator

shall develop processes for Settlement Class Members to return Award Acknowledgement

Forms by regular mail, with stamped, self-addressed envelopes provided, or through a

secure online p01ial. Failure to return the Award Acknowledgement Form does not prevent

a Current Policyholder from becoming a Participating Settlement Class Member.

Settlement Class Members who elect to participate in any potential Replacement LTC


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Policy will be asked to return the Award Acknowledgment Form within 40 days of the

mailing of Class Notice and will thereafter be informed within 75 days of the mailing of

Class Notice whether a Replacement LTC Policy will be available. In the event that a

Replacement LTC Policy is not available, Settlement Class Members who elected to

participate in any potential Replacement LTC Policy will be advised of the deadline to

submit a Request for Exclusion and shall still be entitled to opt-out of the Settlement, so

long as they submit a valid Request for Exclusion by the deadline established in Section

6.1.

5.5 Any Settlement Class Member in Category A as defined in Section 2.2 above who does not

return an Award Acknowledgement Fonn within fifteen (15) days after mailing of the

Notice Packet will be sent a Reminder Postcard by U.S. mail and email (where email

addresses are available) and the Settlement Administrator shall commence calling the

Settlement Class Member by phone (where phone numbers are available) and shall make no

fewer than five (5) attempts to reach the Settlement Class Member by telephone. All phone

calls to Settlement Class Members and/or relatives or other authorized individuals-and the

outcomes of those phone calls-shall be fully documented and recorded by the Settlement

Administrator, with adequate and full disclosure that the call is being recorded and an

agreement to the recording by the Settlement Class Member or such other authorized

individuals. If a Settlement Class Member does not consent to a recording of the call, the

Administrator will use its best effo1is to document the general substance of the call.

5.6 For Participating Settlement Class Members who let their CalPERS LTC Policies Lapse as

a result of the Challenged Increase (Categories D and E as defined in Section 2.2 above),

those Participating Settlement Class Members shall be required to complete and submit a

Lapse Claim Fonn by no later than 120 days after the Notice Date stating under penalty of

pe1jury that they let their CalPERS L TC Policy lapse as a result of the Challenged Increase.

The Administrator shall develop methods for Settlement Class Members to return the Lapse

Claim Form by regular mail, with stamped, self-addressed envelopes provided, or through a

secure online portal.


5.7 For Settlement Class Members who are Cunent Policyholders who were not On Claim as of

2 the Notice Date but are On Claim as of the Final Settlement Date (Category I as defined in

3 Section 2.2 above), CalPERS shall submit a list of such policyholders ("Late Election List")

4 to the Settlement Administrator by no later than 15 days after the Final Settlement Date.

5 By no later than 15 days after receiving the Late Election List, the Settlement Administrator

6 shall disseminate to the Settlement Class Members on the Late Election List via regular

7 mail a form that infonns the Settlement Class Member of their right to choose, within 30

8 days of the date that the Settlement Administrator mails the Late Election Form, whether to

9 keep their CalPERS LTC Policy in place or to Surrender their CalPERS LTC Policy in

I 0 exchange for a Final Settlement Award. The Administrator shall develop methods for

11 Settlement Class Members to return the Late Election Form by regular mail, with stamped,

12 self-address envelopes provided, or through a secure online portal. Settlement Class

13 Members who do not return their Late Election Fom1 within 30 days of the date that the

14 Settlement Administrator mails the Late Election Form shall be deemed to have elected to

15 keep their CalPERS LTC Policy in place. The Settlement Administrator shall send all Late

16 Election Forms to CalPERS as they arc received, but in no event later than 15 days after the

17 expiration of the deadline for Settlement Class Members to return their Late Election

18 Forms.

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5.8 To the extent a Settlement Class Member's address, phone number, or email address is

deemed inoperable or outdated, the Settlement Administrator shall make co1runercially

reasonable efforts to identify alternative addresses, emails or phone numbers. Also, for

Settlement Class Members who cannot be contacted, the Settlement Administrator shall

make commercially reasonable efforts to locate and contact relatives or other authorized

individuals to advise them of the Settlement, the right to seek exclusion or participate in the

benefits of the Settlement.

5.9 For Settlement Class Members who are deceased, the Settlement Administrator shall take

commercially reasonable steps to identify and contact the Settlement Class Members' heirs

and to provide them with the Class Notice.

28 CLASS ACTION SETTLEMENT AGREEMENT AND RELEASE I CASE NO. BCS! 7444

5.10 To answer questions concerning the Settlement and Settlement Class Members' options, the

2 Settlement Administrator shall establish a call center that is sufficiently staffed to handle

3 calls from Settlement Class Members. The Settlement Administrator shall also develop and

4 publish a dedicated website at w1.v\v.c<ili2_g_~JJ_c_1::]assact_ion.cgm to ensure that Settlement

5 Class Members' questions about the Settlement are answered in an adequate and timely

6 manner.

7 5.11 If any Settlement Class Member disputes the information in their Individual Settlement

8 Award Form as to the amount of the premiums paid by the Settlement Class Member or

9 their Initial Settlement Category, the Settlement Class Member may submit that dispute to

l 0 the Settlement Administrator in writing. The dispute must be post-marked no later than 30

11 calendar days after Notice Date, must be in writing, and must include any supporting

12 documentation to support the dispute. After receiving a dispute, the Settlement

l 3 Administrator shall contact counsel for CalPERS and Class Counsel to resolve the dispute.

14 If the dispute cannot be resolved by CalPERS and Class Counsel, the Settlement

15 Administrator shall have the sole authority to resolve any dispute regarding the Initial

16 Settlement Category or Initial Settlement Award amount of the Settlement Class Member

17 and shall issue its decision no later than 30 days after receiving the dispute. After receiving

18 the Settlement Administrator's decision, any Settlement Class Member who submitted a

19 dispute shall still be entitled to opt-out of the Settlement, so long as they submit a valid

20 Request for Exclusion by the deadline established in Section 6.1.

21 5.12 The erroneous mailing of a Class Notice to a person who is not in the Settlement Class shall

22 not render such person a member of the Settlement Class or otherwise entitle such person to

23 participate in the Settlement.

24 5.13 Within 20 days after the Response Deadline, the Settlement Administrator shall provide

25 Class Counsel and CalPERS with the Final Settlement List. And, within 16 court days

26 prior to the Final Approval Hearing, the Settlement Administrator shall file a report with

27 the Court identifying all of its actions taken with respect to Class Notice and identifying all

28 Settlement Class Members who have timely filed a Request for Exclusion.


6. RESPONSES TO CLASS NOTICE

2 6.1 The Class Notice shall direct that each Settlement Class Member wishing to opt-out of the

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Settlement must submit a written and signed Request for Exclusion from the Settlement to

the Settlement Administrator by mail. The Request for Exclusion must be signed and

postmarked by the Response Deadline. For Settlement Class Members who submit their

Request for Exclusion by mail, the date of the postmark on the return mailing envelope

shall be the exclusive means to detern1ine whether a Request for Exclusion has been timely

submitted. The Class Notice shall provide instrnctions to Settlement Class Members on

how to submit a Request for Exclusion. The Award Acknowledgement Form will contain a

section that can be used by Settlement Class Members to opt-out. Settlement Class

Members shall also have the option of submitting a Request for Exclusion no later than 120

calendar days from the Notice Date through a secure online portal established by the

Settlement Administrator.

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submits a timely Request for Exclusion or any Settlement Class Member who submits a

Late Opt-Out Application to determine whether the request was knowingly made and seek

to have the Settlement Class Member retract the Request for Exclusion.

6.3 With the exception of Late Opt-Outs, as described in Section 7 below, every Settlement

Class Member who does not file a timely written Request for Exclusion in accordance with

Section 6.1 above shall be bound by all subsequent proceedings, orders, and judgments in

this Action.

6.4 The Class Notice shall indicate that Settlement Class Members, except those who have

submitted a Request for Exclusion, shall have the right to submit written objections to the

Settlement and/or to appear at the Final Approval Hearing (the then-current date of which

shall be included in the Class Notice) and that if no objection is submitted it is waived and

the Settlement Class Member is deemed to agree with the proposed Settlement. Written

objections, if any, must be served on the Settlement Administrator no later than the

Response Deadline. Settlement Class Members' written comments must include: (I) their


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full name and cunent address and the name of their attorney and attorney's address if the

Settlement Class Member is separately represented by an attorney; (2) reference to the

matter of Wedding v. Ca/PERS, Case No. BC5 l 7444; (3) if the Settlement Class Member

objects to the Settlement, the factual and legal reasons for the objection (including all

relevant documents that pertain to their objection); ( 4) a statement that the Settlement Class

Member has reviewed the Settlement Class definition and understands that they are a

Settlement Class Member, and has not opted out of the Settlement Class; (5) a Notice of

Intention to Appear at the Final Approval Hearing if the Settlement Class Member intends

to appear in person at the hearing; and ( 6) the Settlement Class Member's signature.

Settlement Class Members who have not filed a timely Request for Exclusion may also

appear at the Final Approval Hearing and voice their objection even if they have not

submitted a written objection in accordance with the procedures outlined in this paragraph.

6.5 The Parties may file responses to written objections any time prior to the Fairness Hearing

at which the written objections will be heard, or as otherwise directed by the Comi.

APPLICATIONS TO OPT-OUT AFTER THE RESPONSE DEADLINE

7.1 A Settlement Class Member who did not return an Award Acknowledgement Fonn and did

not submit a timely Request for Exclusion before the Response Deadline (a "Potential Late

Opt-Out") may submit an application (a "Late Opt-Out Application") to the Mediator to be

considered a Late Opt-Out. All Late Opt-Out Applications must comply with the following

requirements:

A. The Application must be submitted to the Mediator in writing, by U.S. Mail, First Class,

and be postmarked no later than 90 days after the mailing of the Class Member's

Settlement Check.

B. The Application must state under penalty of perjury that the Settlement Class Member 1)

did not receive the Notice and was never contacted by the Administrator or 2) was

incapable of understanding the Settlement Notice as a result of mental or physical

incapacity and submit medical records or other documents supporting the Settlement Class

Member's position.


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c. The Application must include the uncashed settlement check issued to the Settlement

Class Member, and an additional check for the amount of premiums that the Settlement

Class Member would have paid between the Final Settlement Date and the date of their

Late Opt-Out Application, absent the Settlement.

7.2 The Mediator shall be responsible for evaluating all Late Opt-Out Applications and shall

only grant an application if the Settlement Class Member demonstrates that they satisfy the

requirements of Section 7. l and did not become aware of the Settlement due to

extraordinary circumstances. Examples of "extraordinary circumstances" include the

failure to receive notice of the Settlement due to a change of the Settlement Class

Member's contact information that was never conveyed to CalPERS or the Settlement

Administrator or because of health issues that demonstrate that the Settlement Class

Member was not capable of understanding the consequences of the Class Notice. In

determining whether a Late Opt-Out Applicant has satisfied the requirements of this

Section and Section 7 .1, the Mediator shall consider both the infonnation submitted by the

Late Opt-Out Applicant and any records maintained by the Settlement Administrator

regarding the Settlement Administrator's attempts to contact the Late Opt-Out Applicant.

7.3 After receiving a Late Opt-Out Application, the Mediator may request additional

information or documentation to support the Settlement Class Member's claim. The

Mediator shall have the sole discretion to allow Late Opt-Outs, and his decision shall be

binding on the parties and non-appealable.

7.4 Within 10 days following the Mediator's decision to grant Late Opt-Out Applications, the

Settlement Administrator shall return to CalPERS an amount equal to the total amount of

the premium refunds that were issued to the Late Opt-Outs along with the checks issued by

the Late Opt-Outs for any premiums due between the period of the Final Settlement Date

and the Late Opt-Out Application. Within 30 days of the granting of the Late Opt-Out

Application, CalPERS shall submit to the Settlement Administrator and Class Counsel its

detennination of the actuarial cost of continuing to insure the Late Opt-Out Applicant under

the Late Opt-Out's CalPERS LTC Policy. If Class Counsel disputes CalPERS'


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determination of the actuarial cost, within 30 days it may submit the dispute to the

Mediator, whose decision shall be binding on the parties.

7.5 After the Administrator has considered all Late Opt-Out Applications and the total actuarial

cost of all Late Opt-Outs has been detennined by CalPERS, subject to the dispute

resolution process in Section 7.4, the Settlement Administrator shall pay to CalPERS the

total actuarial cost of the Late Opt-Outs from the CAF Fund.

CLASS COUNSELS' FEES AND EXPENSES

8.1 Defendant agrees not to oppose any application for an award of reasonable attorneys' fees

to Class Counsel that does not exceed 9% of the Total Settlement Amount, as well as

reimbursement of Class Counsels' Expenses, and Plaintiffs' Service Awards, as described

herein. All sums to be paid to Class Counsel and Plaintiffs' Service Awards pursuant to

this paragraph shall be paid solely from the CAF Fund.

8.2 After a sufficient amount of money is set aside from the CAF Fund to cover Plaintiffs'

Service Awards, Settlement Administration Expenses, and the cost of Potential Late Opt-

Outs, Class Counsels' Fees and Expenses, as awarded by the Court, shall be payable out of

the remainder of the CAF Fund to an account designated by Class Counsel within 15 days

of CalPERS' payment of the Total Settlement Amount. Within 30 days after the

adjudication of all Late Opt-Out Applications, the Settlement Administrator shall pay Class

Counsel any unpaid Fees or Expenses awarded by the Court to the extent such funds are

available in the CAF Fund. If there arc insufficient funds remaining in the CAF Fund to

pay all of Class Counsels' Fees and Expenses, as awarded by the Court, Class Counsel shall

be entitled to recover only the amount available in the CAF Fund.

8.3 Class Counsel may move the Court, and Defendant agrees not to oppose the motion, for a

service award payment to each Plaintiff in a total amount for all Plaintiffs not to exceed

$85,000 to compensate Plaintiffs for efforts undertaken by them on behalfof the Settlement

Class. This Payment of this service award shall be made to each Plaintiff in addition to,

and shall not diminish or prejudice in any way, any settlement relief they may be eligible to

receive. All sums paid to Plaintiffs pursuant to this paragraph shall be paid from the CAF


Fund.

2 8.4 Defendant and Plaintiffs shall not be liable or obligated to pay any fees, expenses, costs, or

3 disbursements to any person, either directly or indirectly, in connection with the claims

4 brought by the Releasing Parties in this Action, this Settlement Agreement, or the

5 Settlement, other than those expressly provided in this Settlement Agreement. This Section

6 shall have no effect on claims brought in the Action by parties other than the Releasing

7 Parties that are unrelated to this Settlement Agreement or the Settlement.

8 8.5 The Parties agree that the Settlement is not conditioned on the Court's approval of

9 Plaintiffs' Service Award or Class Counsels' Fees and Expenses.

10 8.6 Defendant CalPERS shall not have any responsibility for, or interest in, or liability

1 1 whatsoever with respect to the allocation among Class Counsel, and/or any other person

12 who may assert some claim thereto, of any fee or expense award that the Court may make

13 in the Action.

14 9. RELEASES AND WAIVERS OF RIGHTS

15 9.1 Upon the issuance of funds to Participating Class Members pursuant to Section 2.5 of the

16 Settlement, the Releasing Parties shall be deemed to have, and by operation of the Order

17 and Judgment shall have, fully, finally, and forever released, relinquished and discharged

18 the Released Parties of and from all Released Claims.

19 9.2 With respect to any and all Claims released under this Agreement, the Parties stipulate and

20 agree that, upon issuance of funds to Participating Settlement Class Members of the Final

21 Settlement Award pursuant to Section 2.5 of the Settlement, Plaintiffs shall be deemed to

22 have, and by operation of the Order and Judgment shall have, expressly waived and

23 relinquished, to the fullest extent permitted by law, the provisions, rights, and benefits of

24 Section 1542 of the California Civil Code, which provides:

25 A general release does not extend to claims that the creditor or

26 releasing party does not know or suspect to exist in his or her favor at

27 the time of executing the release and that, if known by him or her,

28 would have materially affected his or her settlement with the debtor or


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released party.

Plaintiffs shall, upon the issuance of funds to Participating Settlement Class

Members pursuant to Section 2.5 of the Settlement, be deemed to have, and by operation

of the Order and Judgment shall have, waived any and all provisions, rights, and benefits

conferred by any law of any state or territory of the United States, or principle of common

law, which is similar, comparable, or equivalent to Section 1542 of the California Civil

Code. Plaintiffs may hereafter discover facts in addition to or different from those that

they now know or believe to be true with respect to the subject matter of the Released

Claims, but Plaintiffs, upon the issuance of funds to Participating Settlement Class

Members pursuant to Section 2.5 of the Settlement, shall be deemed to have, and by

operation of the Order and Judgment shall have, fully, finally, and forever settled and

released any and all Released Claims, known or unknown, suspected or unsuspected,

contingent or non-contingent, whether or not concealed or hidden, which now exist, or

heretofore have existed upon any theory of law or equity now existing or coming into

existence in the future, including, but not limited to, conduct relating to the Released

Claims that is negligent, intentional, with or without malice, or any breach of any duty,

law, or rule without regard to subsequent discovery or existence of such different or

additional fact.

9.3 Nothing in this Release shall preclude any action to enforce the terms of this Settlement

Agreement.

COVENANT NOT TO SUE

10.1 Plaintiffs, on behalf of themselves and the other Releasing Parties, covenant and agree that

they will not sue (at law, in equity, in any regulatory proceeding, or otherwise) Defendant

or any other Released Parties with respect to the Released Claims.

NO ADMISSION OF LIABILITY OR WRONGDOING

11.1 The Parties agree and acknowledge that they are entering into this Settlement Agreement

solely to avoid the burden, expenses, and risk of continued litigation. Defendant expressly

disclaims and denies any wrongdoing or liability whatsoever. Neither this Settlement


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Agreement nor the Settlement nor any drafts or communications related thereto, nor any act

performed or document executed pursuant to, or in fmiherance of, the Settlement

Agreement or the Settlement: (a) is or may be deemed to be or may be used as an admission

of, or evidence of, the validity of any Released Claim, or of any wrongdoing or liability of

the Released Parties, or any of them; or (b) is or may be deemed to be or may be used as an

admission of, or evidence of, any fault or omission of the Released Patiies, or any of them,

in any civil, criminal or administrative proceeding in any court, administrative agency or

other tribunal. Nothing in this paragraph shall prevent Defendant and/or any of the

Released Patiies from using this Settlement Agreement and Settlement or the Order and

Judgment in any action that may be brought against them in order to support a defense or

counterclaim based on principles of res judicata, collateral estoppel, release, good faith

settlement, judgment bar or reduction or any other theory of claim preclusion or issue

preclusion or similar defense or counterclaim.

FAIR, REASONABLE, AND ADEQUATE SETTLEMENT

12"1 The Parties believes this Settlement Agreement is a fair, reasonable, and adequate

settlement of the Action and have arrived at this Settlement Agreement through arms-length

negotiations (including multiple day-long mediation sessions conducted by the Mediator on

September 4, 2019, October 7, 2019, November 14, 2019, and March 27, 2021) as well as

numerous communications with the Mediator throughout the period from August 2019

through to March 2021, taking into account all relevant factors, present and potential.

AUTHORITY

13"1 In executing this Settlement Agreement, Plaintiffs, on behalf of themselves and the

Settlement Class, represent and warrant that, as far as they are aware, Settlement Class

Members are the only persons having any interest in any of the claims that are described or

referred to herein, or in any of the pleadings, records, and papers in the Action, and, except

as provided herein, Plaintiffs are unaware of said claims or any part thereof having been

assigned, granted or transfened in any way to any other person, firm, or entity.

13"2 This Settlement Agreement is executed voluntarily and without duress or undue influence


on the part of or on behalf of the Parties, or of any other person, firm or entity.

2 13.3 This Settlement Agreement shall bind and inure to the benefit of the respective successors,

,., .) assigns, legatees, heirs, and personal representatives of each of the Pmiies .

4 13.4 The Parties hereby acknowledge that they have been represented in negotiations for and in

5 the preparation of this Settlement Agreement by independent counsel of their own

6 choosing, that they have read this Settlement Agreement and have had it fully explained to

7 them by such counsel, and that they arc fully aware of the contents of this Settlement

8 Agreement and of its legal effect.

9 13.5 Each Party warrants and represents that there are no liens or claims of lien or assignments

10 in law or equity or otherwise of or against any of the claims or causes of action released

1 1 herein and, further, that each Party is fully entitled and duly authorized to give this

12 complete and final release and discharge.

13 14. CONSTRUCTION AND INTERPRETATION

14 14.1 Neither the Parties nor their respective counsel shall be deemed the drafter of this

15 Settlement Agreement for purposes of interpreting any provision hereof in any judicial or

16 other proceeding that may arise between or among them.

17 15. MODIFICATIONS AND AMENDMENTS

18 15.1 This Settlement Agreement supersedes all prior and contemporaneous negotiations and

19 agreements. No amendment, change or modification of this Settlement Agreement or any

20 part thereof shall be valid unless in writing and signed by the Parties.

21 16. NO REPRESENTATIONS OF FACT

22 16.l In entering into and executing this Settlement Agreement, the Parties warrant that they are

23 acting upon their respective independent judgments and upon the advice of their respective

24 counsel, and not in reliance upon any warranty or representation, express or implied, of any

25 nature or kind by any other person or entity, other than the wmi-anties and representations

26 expressly made in this Settlement Agreement.

27 17. GOVERNING LAW

28 17 .1 This Settlement Agreement is entered into in accordance with the laws of the State of

37 CLASS ACTION SETTLEMENT AGREEMENT AND RELEASE I CASE NO. BC517444

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California and shall be governed by and interpreted in accordance with the laws of the State

of California, without regard to its conflict of law principles.

FURTHER ASSURANCES

18.l Each of the Parties hereto shall execute and deliver any and all additional papers,

documents and other assurances and shall do any and all acts or thing reasonably necessary

in connection with the performance of its or their obligations hereunder to carry out the

express intent of the Parties hereto.

TERMINATION

19.1 CalPERS shall have the option, but not the obligation, to terminate this Settlement no later

than 60 days after CalPERS receives the Final Settlement List from the Settlement

Administrator if either: (1) more than 10% of the Settlement Class (by policy count) timely

and validly requests to be excluded from the Settlement, or (2) CalPERS's performance of

the Settlement Agreement would, by CalPERS' s actuaries' determination, as of the

deadline for submitting requests for exclusion from the Class, (a) result in an LTC Fund

Margin of less than 10% or, (b) if the L TC Fund Margin would be less than 10% even

absent the performance of the Settlement Agreement, if the performance of the Settlement

Agreement would decrease the L TC Fund Margin. For the purposes of perfonning the

calculations described above, CalPERS may, but is not required to treat Potential Late-Opt

Outs as if they have opted out of the Settlement. In addition, CalPERS has the option, but

not the obligation, to terminate this Settlement pursuant to subsection (2) of this section

even if the use of funds from the CAF Fund could restore the L TC Fund margin to 10% or

to the level of the LTC Fund Margin absent the implementation of the Settlement

Agreement.

19.2 Concurrent with the provision of its calculation of the L TC Fund Margin to Plaintiffs,

CalPERS shall also provide Class Counsel with a list of all actuarial assumptions it utilized

in its calculations.

19.3 If CalPERS decides to terminate the Settlement pursuant to this Section, it shall cooperate

with Plaintiffs and Class Counsel to provide Plaintiffs and Class Counsel with the


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information needed to evaluate whether this termination provision was properly invoked.

19 .4 If there is a dispute between the Parties regarding whether the Termination Provision in this

Section is triggered, the Parties agree to have that dispute decided by the Mediator whose

ruling will be binding and non-appealable. Any Party wishing to initiate a dispute pursuant

to this Section must file a challenge within thirty (30) days of CalPERS 's notification to

Plaintiffs that it believes that the Termination Provision has been properly triggered. The

other Party shall respond to the challenge within fourteen (14) days. The Mediator may

modify the schedule for good cause but all effort should be made for the challenge to be

resolved no later than thirty (30) days prior to the Fairness Hearing.

CONTINUING JURISDICTION

20.1 The Parties to this Settlement Agreement stipulate that, the Order and Final Judgment shall

provide that the Court shall retain personal and subject matter jurisdiction over the Action

and the Parties and Participating Settlement Class Members after the entry of the Order and

Final Judgment.

PRESS RELEASES

21.1 If the Parties initiate any public comments to the media or respond to any media inquiries,

they shall either (a) work cooperatively to announce the Settlement either via joint press

release or, if a Party wishes to announce the Settlement via a unilateral press release, after

obtaining consent from the other Party regarding the language of the press release, which

consent shall not be unreasonably withheld, and with any dispute over the content of a

disputed unilateral press release being resolved by the Mediator, (b) work cooperatively to

coordinate appropriate public comments about the Settlement, and/or ( c) refer to publicly

filed documents in the Action. The Parties shall not otherwise make any other statements to

the media or issue any press releases, generally, concerning the Settlement.

TAX REPORTING AND NO PREY AILING PARTY

22.1 Any Participating Settlement Class Member or any other persons or entities receiving any

payment or consideration pursuant to this Settlement Agreement shall alone be responsible

for the reporting and payment of any federal, state and/or local income or other form of tax


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on any payment or consideration made pursuant to this Settlement Agreement, and

Defendant shall have no obligations to report or pay any federal, state and/or local income

or other form of tax on any payment or consideration made pursuant to this Settlement

Agreement.

22.2 All taxes resulting from the tax liabilities of the Settlement Account shall be paid solely out

of the Settlement Account.

22.3 No Party shall be deemed the prevailing party for any purposes of this Action.

COUNTERPARTS

23.1 This Settlement Agreement may be executed in counterparts, each of which shall constitute

an original, but all of which together shall constitute one and the same instrument. The

several signature pages may be collected and annexed to one or more documents to fonn a

complete counterpart. Photocopies of executed copies of this Settlement Agreement may

be treated as originals.

NOTICES

24.1 Unless otherwise specifically provided herein, all notices, demands, or other

communications given hereunder shall be in writing and shall be deemed to have been duly

given as of the date of electronic mailing. Postal mailing will be provided as well,

addressed as follows:

To Class Counsel:

Michael J. Bidart [email protected] Steven M. Schuetze [email protected] SHERNOFF BIDART ECHEVERRIA LLP 600 South Indian Hill Boulevard Claremont, California 91711

Gregory L. Bentley [email protected] BENTLEY & MORE, LLP 4931 Birch Street Newport Beach, California 92660


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Gretchen M. Nelson [email protected] NELSON & FRAENKEL LLP 601 So. Figueroa Street, Suite 2050 Los Angeles, CA 9001 7

Stuart C. Talley [email protected] KERSHAW, COOK & TALLEY PC 401 Watt Avenue Sacramento, CA 95864 ·

To CalPERS Counsel:

Ragesh K. Tangri [email protected] DURIE TANGRI LLP 21 7 Leidesdorff Street San Francisco, CA 94111

Matthew G. Jacobs, CalPERS [email protected] Lincoln Plaza Notih 400 Q Street, Suite 3340 Sacramento, CA 95811

General Counsel, CalPERS Lego_ [email protected] Lincoln Plaza North 400 Q Street, Suite 3340 Sacramento, CA 95811

OTHER PROVISIONS

25.1 The Parties: (a) acknowledge that it is their intent to consummate this Settlement

Agreement, (b) agree to cooperate in good faith to the extent reasonably necessary to effect

and implement all terms and conditions of the Agreement and to exercise their best effotis

to fulfill the foregoing tenns and conditions of the Agreement, and ( c) agree to cooperate in

good faith to obtain preliminary and final approval of the Settlement and to finalize the

Settlement.

25.2 Plaintiffs: (a) agree to serve as representatives of the Settlement Class; (b) remain willing,


able, and ready to perform all of the duties and obligations of a representative of the

2 Settlement Class; ( c) are familiar with the allegations in the Action, or have had such

3 allegations described or conveyed to them; ( d) have consulted with Class Counsel about the

4 Action (including discovery conducted in the Action), this Settlement Agreement, and the

5 obligations of a representative of the Settlement Class; and ( e) shall remain and serve as

6 representatives of the Settlement Class until the terms of this Settlement Agreement are

7 effectuated and fully implemented, this Settlement Agreement is terminated in accordance

8 with its terms, or, the Cami at any time determines that the Plaintiffs cannot represent the

9 Settlement Class.

l 0 25.3 No person or entity shall have any claim against Plaintiffs, Class Counsel, the Settlement

11 Administrator, Defendant's counsel or any of the Released Parties based on actions taken

12 substantially in accordance with the Settlement Agreement and the Settlement contained

13 therein or fmiher orders of the Court.

14 25.4 Plaintiffs and Class Counsel agree that if this Settlement Agreement or the Settlement fails

15 to be approved, fails to become effective, or otherwise fails to be consummated, or if there

16 is no Final Settlement Date, then: (a) the Paiiies will be returned to the status quo ante, as if

l 7 this Agreement had never been negotiated or executed, except that, as provided in Section

18 5 .2, up to $900,000 Settlement Administration Expenses and money paid to the Long Term

l 9 Care Group in connection with the Long Term Care Group's hiring of additional people to

20 answer phone calls from members of the Settlement Class prompted by the Class Notice

21 shall not be recouped by Defendant; and (b) Defendant shall retain, and expressly reserves,

22 any and all of the rights it had prior to the execution of this Settlement Agreement to object

23 to the maintenance of the Action as a class action by Class Counsel and Plaintiffs.

24 Plaintiffs and Class Counsel agree that nothing in this Settlement Agreement or other

25 papers or proceedings related to the Settlement shall be used as evidence or argument

26 concerning whether the Action may properly be maintained as a class action, whether the

27 purported class is ascertainable, or whether Class Counsel or Plaintiffs can adequately

28 represent class members under applicable law. If the Agreement is deemed void or the

42 CLASS ACTION SETTLEMENT AGREEMENT AND RELEASE I CASE NO. BCS I 7444

Final Settlement Date does not occur, Plaintiffs and Class Counsel agree not to argue or

2 present any argument, and hereby waive any argument, that Defendant could not contest (or

3 is estopped from contesting) maintenance of this Action as a class action based on any

4 grounds Defendant had prior to the execution of this Settlement Agreement; and this

5 Settlement Agreement shall not be deemed an admission by, or ground for estoppel against,

6 Defendant that class certification or any claims brought in the Action are proper or that

7 such class certification or claims cannot be contested on any grounds that Defendant had

8 prior to the execution of this Settlement Agreement. In the event the Agreement is declared

9 void or the Final Settlement Date does not occur, Plaintiffs and Class Counsel retain and

10 reserve any and all rights and arguments they had prior to execution of this Agreement to

11 oppose Defendant's positions and arguments. Each of the Parties will be restored to the

12 place they were in as of the elate this Settlement Agreement was signed with the right to

13 assert in the Action any argument or defense that was available to them at that time.

14 25.5 The Parties agree, to the extent permitted by law, that all agreements made and orders

15 entered during the course of the Action relating to confidentiality of information shall

16 survive this Settlement Agreement.

17 25.6 Other than necessa1y disclosures made to the Court or the Settlement Administrator this

18 Settlement Agreement and all related information and communication shall be held strictly

1 9 confidential by Plaintiffs, Class Counsel and their agents until such time as the Parties file

20 this Settlement Agreement with the Court.

21 25. 7 The Parties and their counsel further agree that their discussions and the infonnation

22 exchanged in the course of negotiating this Settlement Agreement are confidential under the

23 terms of the mediation agreement signed by the Parties in connection with the mediation

24 sessions with the Mediator and any follow-up negotiations between the Parties' counsel.

25 Such exchanged information was made available on the condition that neither the Parties

26 nor their counsel may disclose it to third parties (other than experts or consultants retained

27 by the Parties in connection with the Action and subject to confidentiality restrictions), that

28 it not be the subject of public comment, and that it not be publicly disclosed or used by the


II DocuSign Envelope ID: 706DF895-9E62-442F '-E8BEOCB41 ED6

Parties or their counsel in any way in the Action should it not settle, or in any other

2 proceeding; provided however, that nothing contained herein shall prohibit the Patties from

3 seeking such information through formal discovery if not previously requested through

4 formal discovery or from refening to the existence of such information in connection with

5 the Settlement of the Action.

6 25.8 The Parties reserve the right to agree between themselves on any reasonable extensions of

7 time that might be necessary to cany out any of the provisions of this Settlement

8 Agreement.

9

10 IN WITNESS THEREOF, each of the signatories has read and understood this Settlement

11 Agreement, has executed it, and represents that they are authorized to execute this Settlement Agreement

12 on behalf of the Patty or Parties they represent, who or which has agreed to be bound by its terms and has

13 entered into this Settlement Agreement.

14 tS~~FEiRS

15 flA oJ I l1vcw Jo.rJJh

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Matthew G. Jacobs General Counsel

7/12/2021

Date

Plaintiffs

Holly Wedding Plaintiff and Class Representative

Date

Richard M. Lodyga Plaintiff and Class Representative

Date

Eileen Lodyga Plaintiff and Class Representative

Date


l\irri,~s ur their U)l!i1Scl in :my w~iv i11 the Action shollld it 1101';ctli(\1>r in aw. other

pr\Kcc·ding. prnvickd hClwevcr, that 1H1thing C\11Hnincd herein ~;hall prohihit the Purtic:s frorn

scckinl-'. such inl(Jrrn:1tion through formal discov<..'ry if nut previously rcqticstcd through

the Settlement of thr: Action.

(i

7

1\grccmc11t.

I 0 IN W!T0iESS THEREOr, each of the signatmics has read and unclerstc>Jd rhis S(·ttkrnc:·nt

i I Asreernent. has executed il, and ceprcscnts that they are authorized to execute this Scnk:rnc:nt ·\srecrnenl

l 2 on khal f of the Party or Parties they represent \I ho or which has agreed to be bound by its tcrrm and has

i? enrcrcd into this Senlerncnt Agreement.

I-+ CalPERS

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l 6 \fatthe11 CJ. Jacobs General Counsel

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I 8 Date

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, .. _)

')'7 / ~,

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Ph1i11tim . 1 I ., ; /: 'l;lf;, ;( <; ,;) ',. -J _,A."/\ ci,,..y·,,r· ------------L-···--··--7-----···-····

Holly W6dding : Plaiptiff i)nd Class Rcprcse-r'ltatiw

,_2fL2-/2.f2~LJ _______________ . Ddte ,

-----·------~--------·-----

Richard M. Lodyga Plaintiff and Clase; F'.epresentati\c

Date

-------··-----------Eiken Ludygn Plaintiff and Class Representative

Date

Cl /\SS ACTION Sl: ITU MLNT A(i[~J:EMLNT AND Rl .UASL ··CASI NO. llCS i 7'14·1

II DocuSign Envelope ID: 5BOBEAC1-7A8E-423' 'iB-4F1AE5F74AB9

Paiiies or their counsel in any way in the Action should it not settle, or in any other

2 proceeding; provided however, that nothing contained herein shall prohibit the Parties from


4 formal discovery or from referring to the existence of such information in connection with



7 time that might be necessary to carry out any of the provisions of this Settlement

8 Agreeme~.

9

I 0 IN WITNESS THEREOF, each of the signatories has read and understood this Settlement


12 on behalf of the Party or Parties they represent, who or which has agreed to be bound by its terms and has


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CalPERS

Matthew G. Jacobs General Counsel

Date

Plaintiffs

Holly Wedding Plaintiff and Class Representative

-·-···-··llnJ;'filit0t hy l VZ/'--- c ~_I vv\ ;;;Pµ--,J;;;; < °', .,,, R'ict'iart'l' M. Lodyga

Plaintiff and Class Representative 7/12/2021

Date

Eileen Lodyga Plaintiff and Class Representative

Date

44 CLASS ACTION SETTLEMENT AGREEMENT AND RELEASE I CASE NO. BC517444

II DocuSign Envelope ID: 3F868C28-0A68-48DF -::-BC03FOC07CD1

Parties or their counsel in any way in the Action should it not settle, or in any other

2 proceeding; provided however, that nothing contained herein shall prohibit the Parties from


4 formal discovery or from referring to the existence of such information in connection with



7 time that might be necessary to carry out any of the provisions of this Settlement

8 Agreement.

9

10 IN WITNESS THEREOF, each of the signatories has read and understood this Settlement


12 on behalf of the Party or Parties they represent, who or which has agreed to be bound by its terms and has


14 CalPERS Plaintiffs

15

16 Matthew G. Jacobs Holly Wedding General Counsel

17 Plaintiff and Class Representative

18 Date Date

19 Richard M. Lodyga

20 Plaintiff and Class Representative

21 Date

22

23

24

Eileen Lodyga

I .. ,,; "" .,,~,1,.(! 1in1tiff and .Class Representative

I )'"I c. ~ ,,, ., 1, . , . - "'11~'~~~~~~~~~~~

· ·!/'.Jf 1Gate .. u·1

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11 DocuSign Envelope ID: 706DF895-9E62-442F '-E8BEOCB41 ED6

DURIE T ANGRJ LLP

SHERNOFF BIDART ECHEVERRIA LLP

Bv: __________________ ----tMICHAEL J. BIDART STEVEN M. SCHUETZE KRISTINE. HOBBS

Attorneys for Plaintiffs and the Class

BENTLEY & MORE, LLP

Bv: __________________ _ GREGORY L. BENTLEY CLARE H. LUCICH MATTHEW W. CLARK


NELSON & FRAENKEL LLP

Bv: __________________ ----t-GRETCHEN M. NELSON STUART R. FRAENKEL



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Approved as to form.

Dated: July 12, 2021




DURIE TANGRI LLP

Bv:_ RAGESH K. T ANGRl

Attorney for Defendant CALIFORNIA PUBLIC EMPLOYEES' RF.T!Rl~MENT SYSTEM


I~ ;v.20~~1 /ti// , /If~-·-""' Bv: z_~or ... Gt/t.,,t...,

rv CHA :•J, J. BIDART STEVEt M. SCHUETZE KRISTfN E. HOBBS


BENTLEY & MORE, LLP

GREGORY L. BENTLEY CLARE H. LUCICH MATTHEW W. CLARK



GRETCHEN M. NELSON STUART R. FRAENKEL



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Approved as to forrn.

Dated: July 12, 202 l

Dated: July 12, 202 l

Dated: July l 2, 202 l


DURIE TANGRI LLP

Bv:. _________________ --+

RAG ESH K. T ANGIU

Attorney for Defendant CALIFORNIA PUBLIC EMPLOYEES' RET1RElv1ENT SYSTEM

SHERNOFF BlDART ECHEVERRIA LLP

Bv: ______________ . ___ --+

MICHAEL J. BIDART STEVEN M. SCHUETZE KRISTIN E. HOBBS


.4 BENTLE.h.& ~~~ LLP / /7~ \ I I I

f I I .~ \_

Bv: ~ GR~Y L. BENTLEY CLARE H. LUCICH MATTHEW W. CLARK



Bv: _____________ _ GRETCHEN M. NELSON STUART R. FRAENKEL


45 --···· - ·----......:..::...-------------

CLASS ACTION SETTLEMENT AGREEMENT AND RELEASE! CASE NO. BCSI 7444

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Approved as to form.





DURIE TANGRI LLP

Bv: _________________ --1-

RAGESH K. TANGRI

Attorney for Defendant CALIFORNIA PUBLIC EMPLOYEES' RETIREMENT SYSTEM


Bv: _________ ~------------+ MICHAEL J. BIDART STEVEN M. SCHUETZE KRlSTIN E. HOBBS


BENTLEY & MORE, LLP

Bv: _________________ --+

GREGORY L. BENTLEY CLARE H. LUCICH MATTHEW W. CLARK



~ ~---Bv:====~~~~~---------1 GRETCHEN M. NELSON STUART R. FRAENKEL



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Dated: July 12, 2021 KERSHAW, COOK & TALLEY PC



durie tang ri llp j

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