Case 2:10-cv-09198-JVS -RNB Document 328-1 Filed 09/10/12 Page 1of6 Page ID
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EXHIBIT A

KASOWITZ, BENSON, TORRES & FRIEDMAN LLP

101 CALIFORNIA STREET, SUITE 2300
SAN FRANCISCO, CALIFORNIA 94111

Case 2) 0-cv-09198-JVS -RNB Document 328-1 Filed 09/10/12 Page2of6 Page ID
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KASOWITZ, BENSON, TORRES & FRIEDMAN LLP
CHARLES N. FREIBERG (SBN 70890)

BRIAN P. BROSNAHAN (SBN 112894)

JACOB N. FOSTER (SBN 250785)
101 California Street, Suite 2300
San Francisco, California 94111
Telephone: (415) 421-6140
Facsimile: (415) 398-5030

LEVINE & MILLER

HARVEY R. LEVINE (SBN 61879)
CRAIG A. MILLER (SBN 116030)
LEVINE & MILLER

550 West C Street, Suite 1810

San Diego, CA 92101-8596
Telephone: (619) 231-9449
Facsimile: (619) 231-8638

Attorneys for Plaintiffs

JOYCE WALKER, KIM BRUCE HOWLETT,
and MURIEL SPOONER, on behalf of themselves

and all others similarly situated

UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA

JOYCE WALKER, KIM BRUCE
HOWLETT, and MURIEL
SPOONER, on behalf of themselves
and all others similarly situated,

Plaintiffs,
V.
LIFE INSURANCE COMPANY OF
THE SOUTHWEST, a Texas
corporation,

Defendant.

CLASS ACTION

CASE NO.: CV 10-9198 JVS (RNBx)
Formerly Case No.: 3:10-cv -04852
JSW

from Northern District of California
PLAINTIFFS’ RESPONSE TO
LSW’S NOTICE OF
SUPPLEMENTAL AUTHORITY

Judge James V. Selna
Courtroom: 10C

PLAINTIFFS’ RESPONSE TO LSW’S NOTICE OF SUPPLEMENTAL AUTHORITY

ase No. CV 10-9198 JVS (RNBx)

KASOWITZ, BENSON, TORRES & FRIEDMAN LLP

101 CALIFORNIA STREET, SUITE 2300
SAN FRANCISCO, CALIFORNIA 94111

Case

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Tucker v. Pacific Bell Mobile Services, 208 Cal. App. 4th 201 (2012) does
not counsel for denial of certification. First, Tucker and the “virtually
indistinguishable” case upon which it relied (Knapp v. AT&T, 195 Cal.App.4th
932, 944 (2011)) involved situations where the “the face of the complaint itself”
revealed that representations in oral conversations and “various written
materials” were “not uniformly made,” and, in fact, the information that plaintiffs
claimed was undisclosed was expressly disclosed “in the same materials that
Plaintiffs cite in support of their misrepresentation claims.” Tucker, 208 Cal. App.
Ath at 221. Tucker has no application to Plaintiffs’ volatility and tax defect claims,
as to which LSW does not identify any relevant disclosures, and is distinguishable
from Plaintiffs’ illustration claims because LSW does not dispute that each
subclass member was exposed to deceptive illustrations. Cf id. at 225 (“nothing
before the Court” showed that deceptive representations were made).

Tucker at most implicates whether the bait and switch aspect of the
Minimum Guaranteed Interest claim should be certified in light of LSW’s
contention that some subclass members received a Buyer’s Guide at or before the
time they applied for the policy, thus arguably raising individual issues. Tucker
does not extend to any alleged oral disclosures as to the Undisclosed Fees,
Minimum Guaranteed Interest, and Current Basis claims because of the Ninth
Circuit’s controlling decision in Yokoyama v. Midland Nat’! Life Ins. Co, 594 F.3d
1087, 1093 (9th Cir. 2008).' Tucker does not bear on any written disclosures
provided in the policy and the Buyer’s Guide at the time of policy delivery because
all class members received these disclosures, so no individual issues are presented
by the giving of such disclosures at the time of policy delivery. LSW contends,
however, that some subclass members received, at or before the time of policy

application, a Buyer’s Guide that disclosed that the interest guarantee is not a true

' LSW does not identify any relevant oral disclosures as to the Guaranteed
Monthly Administrative Charge reduction claim.

PLAINTIFFS’ RESPONSE TO LSW’S NOTICE OF SUPPLEMENTAL AUTHORITY
Case No. CV 10-9198 JVS (RNBx)
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KASOWITZ, BENSON, TORRES & FRIEDMAN LLP

101 CALIFORNIA STREET, SUITE 2300
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annual guarantee, and that this raises individual issues with respect to the bait and
switch claim under the UCL. The Buyer’s Guide does not bear on Plaintiffs’ other
illustration-based claims, and none of the other written marketing documents
potentially provided by agents before policy delivery even arguably corrects the
false impression conveyed by the illustration. See Plaintiffs’ Reply at 11-13 (Dkt.
291); Foster Dec. J 5, 15-39 (Dkt. 307).

As to the Minimum Guaranteed Interest bait and switch claim, Tucker is
inapplicable for numerous reasons. First, the Buyer’s Guide does not alert
policyholders that no guaranteed interest is credited to policies that lapse or that the
guaranteed minimum values stated in the illustration are incorrect. Second, LSW
does not contest that all subclass members received an illustration that deceptively
presented the minimum interest guarantee. Third, on the facts in Tucker, the court
rejected a presumption of common reliance under the UCL because the record
there “would not permit it” due to the named plaintiffs’ failure to allege reliance
and because the allegedly undisclosed information was disclosed “‘in the same
materials that Plaintiffs cite in support of their misrepresentation claims.” Tucker,
208 Cal. App. 4th at 221, 224, 227. Here, in contrast, each of the named plaintiffs
alleges reliance on the deceptive illustration. Fourth, LSW has asserted that it does
not contest reliance. Opp’n at 17:1-10. Finally, LSW has offered no evidence that
any significant number of subclass members received the Buyer’s Guide at or
before the time of application.

Tucker also contains dicta about restitution that is inapposite and contrary to
the law. Tucker’s discussion of restitution is inapposite because it considered a
refund measure of damages whereas this Court has authorized an actual value

measure of damages based on the price at which the policies were sold.” Thus,

* The only refund measure advanced by Plaintiffs is the alternative “refund” theory
for the Undisclosed Fees and Minimum Guaranteed Interest claims. See |
Declaration of William Brockett in Support of Motion for Class Certification (Dkt.
228) at Jf 105 & 108.

PLAINTIFFS’ RESPONSE TO LSW’S NOTICE OF SUPPLEMENTAL AUTHORITY
Case No. CV 10-9198 JVS (RNBx)
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KASOWITZ, BENSON, TORRES & FRIEDMAN LLP

101 CALIFORNIA STREET, SUITE 2300
SAN FRANCISCO, CALIFORNIA 94111

Case

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anyone who would not have bought the policy but for the deception (i.e., who
relied or is presumed to have relied) was harmed, and is entitled to restitution,
because they purchased a policy whose actual value is less than what the
policyholder paid for it.

Tucker’s discussion of restitution is contrary to the law because it conflicts
with the California Supreme Court’s decision in In re Tobacco II, 46 Cal. 4th 298,
320 (2009) and the cases upon which that court relied. Jd. at 320 (citing Fletcher
v. Security Pac. Nat’! Bank, 23 Cal. 3d. 442, 452 (1979), Committee on Children’s
Television v. General Foods Corp., 35 Cal. 3d 197, 211 (1983) and Bank of the
West v. Sup. Ct., 2 Cal. 4th 1254, 1264 (1992)). Tucker concluded in dicta that
“even if we assume that there were a common misrepresentation as to the number
of conversational minutes in the Defendant’s advertised rate plans, and that the
representations were material, .. . Those who were aware of the rounding up
practice, by disclosure or otherwise, could not be said to be entitled to return of any
amounts paid to the Defendants.” Tucker, 208 Cal. App. 4th at 228-29. But the
Supreme Court in Fletcher held exactly the opposite in the context of Business and
Professions Code Section 17535, which has the same language regarding
restitution as does the UCL. Fletcher, 23 Cal. 3d at 449-54. Fletcher’s holding
that individualized proof of knowledge is not required for restitution was
broadened and adopted in the context of the UCL by subsequent Supreme Court
cases, leading the Court in Tobacco II to find that courts have “ repeatedly and
consistently” held that relief under the UCL is available without individualized
proof of deception, reliance and injury,” and that “to hold that the absent class
members on whose behalf a private UCL action is prosecuted must show on an
individualized basis that they have ‘lost money or property as a result of the unfair
competition’ (§ 17204) would conflict with the language in section 17203
authorizing broader relief—the ‘may have been acquired’ language—and

implicitly overrule a fundamental holding in our previous decisions, including

PLAINTIFFS’ RESPONSE TO LSW’S NOTICE OF SUPPLEMENTAL AUTHORITY
Case No. CV 10-9198 JVS (RNBx)
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101 CALIFORNIA STREET, SUITE 2300
SAN FRANCISCO, CALIFORNIA 94111

Case

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Fletcher, Bank of the West and Committee on Children's Television.” In re
Tobacco II, 46 Cal. 4th at 320.°

The Tucker court’s dicta would mean that class actions for restitution under
the fraudulent prong could never be certified because the knowledge of each
individual class member would always need to be examined. The Tucker dicta
thus would overrule sub silentio the presumption of classwide knowledge, reliance
and injury established by the Supreme Court in Fletcher and its progeny, including
Tobacco II.*

Dated: September 10, 2012 KASOWITZ, BENSON, TORRES & FRIEDMAN

By: /s/ Brian P. Brosnahan

* Lest LSW try to argue that Tobacco II is limited to the issue of standing under
Section 17204, it must be observed that the discussion of restitution above was a
premise of the Court’s conclusion that individualized proof was not needed for
standing. The Court reasoned that because individualized proof was not needed
for restitution, it made no sense to require it for standing. 46 Cal. 3d at 320.

* The cases cited by Tucker do not support its dicta. In In re Vioxx Class Cases,
180 Cal. App. 4th 116, 136 (2009) there was no common reliance and
measurement of restitution would have involved individual issues of medical
Aue patient needs, and drug interaction. In Day v. AT & T Corp., 63 Cal. App.
Ath 325, 340 (2998) restitution was barred by the filed rate doctrine.

PLAINTIFFS’ RESPONSE TO LSW’S NOTICE OF SUPPLEMENTAL AUTHORITY
Case No. CV 10-9198 JVS (RNBx)
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