KASOWITZ, BENSON, TORRES & FRIEDMAN LLP

101 CALIFORNIA STREET, SUITE 2300 SAN FRANCISCO, CALIFORNIA 94111

Case

:10-cv-09198-JVS -RNB Document 348 Filed 10/05/12 Page 1 of 11 #:15303

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 (s BN 61879) CRAIG A. MILLER US N 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

SOUTHERN DIVISION

JOYCE WALKER, KIM BRUCE CLASS ACTION HOWLETT, and MURIEL ee

Page ID

SPOONER, on behalf of themselves CASE NO.: CV 10-9198 JVS (RNBx)

and all others similarly situated, Plaintiffs,

Formerly Case No.: 3:10-cv -04852 JSW

from Northern District of California

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PLAINTIFFS’ NOTICE OF LIFE INSURANCE COMPANY OF MOTION AND MOTION FOR

THE SOUTHWEST, a Texas

corporation, LEAVE TO FILE A REPLY TO

LSW’S SUBSTITUTED

Defendant. SUPPLEMENTAL

Date: a Court:

MEMORANDUM IN SUPPORT OF CLASS CERTIFICATION

District J yen : ey be Selna

PLAINTIFFS MOTION FOR LEAVE TO FILE A REPLY TO LSW’S SUBSTITUTED SUPPLEMENTAL MEMORANDUM; CASE NO. CV 10-9198 JVS (RNBX)

KASOWITZ, BENSON, TORRES & FRIEDMAN LLP 101 CALIFORNIA STREET, Suite 2300

SAN FRANCISCO, CALIFORNIA 94111

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TABLE OF CONTENTS Page NOTICE OF MOTION AND MOTION FOR LEAVE TO FILE A REPLY TO LSW’S SUBSTITUTED SUPPLEMENTAL MEMORANDUM IN SUPPORT OF CLASS CERTIFICATION 00... ccccssececeseesssereeeesscssssssnceeaeeeosens 0 MEMORANDUM OF POINTS AND AUTHORITIES... ee eeeeeeeeeeeeeees | I. TIN TROT © OWN areas rece yotce seats steeesgerses eenesapeesianeed-ceeccneaeesaessecseesecntns l Il. THE COURT POSSESSES DISCRETION TO AFFORD PLAINTIFFS THE OPPORTUNITY TO SUBMIT A REPLY BRIEF ...... 2 fl. PLAINTIFFS SHOULD BE PROVIDED THE OPPORTUNITY TO RESPOND BECAUSE LSW’S BRIEF RAISES NEW ARGUMENTS OUTSIDE THE SCOPE OF THE REQUESTED PN eae ssc vac rowers ccc gee pipe ete enn eevee ee eeetapencyeeane eianssesneense 3 A. | LSW’s Brief Exceeds The Scope of the Court’s Order..................0 3 B. | LSW’s Substitute Brief Is Misleading and Attempts To Confuse RING: IC ORG: ANN CI © OUINU oaaeseneec te cracceeaeory canteens assy coacpsns oqeereeeeeseanes 4 LSW’s Substitute Brief Takes New and Inconsistent Positions......... 5 Plaintiffs Should Be Provided Leave To File a Reply Pursuant OM Ocal C400 Coon 6) Oh G0) 1116) (nd Cos 0 oh anne reer 6 E. | The Changed Nature of LSW’s Substitute Brief Justifies Allowing a Reply from Plaintiffs Because Plaintiffs Are the IV NON GS EY ogre cp wate te seg oes ane ace cerva ee sece scene anges eens erences cnet 6 Ap Fame @ 10 | ©) BBY (6) ener nereenerent rene sree rere Free rer reer meer errr rrr er 8

PLAINTIFFS MOTION FOR LEAVE TO FILE A REPLY TO LSW’S SUBSTITUTED

SUPPLEMENTAL MEMORANDUM; CASE NO. CV 10-9198 JVS (RNBX)

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NOTICE OF MOTION AND MOTION FOR LEAVE TO FILE A REPLY TO LSW’S SUBSTITUTED SUPPLEMENTAL MEMORANDUM IN SUPPORT OF CLASS CERTIFICATION TO THE COURT, DEFENDANT, AND ALL COUNSEL OF RECORD: PLEASE TAKE NOTICE THAT Plaintiffs Joyce Walker, Kim Howlett, and

Muriel Spooner (“Plaintiffs”) respectfully request leave to file a reply to LSW’s substituted supplemental memorandum, declarations and exhibits thereto. Plaintiffs’ reply memorandum and reply declaration are attached hereto as Exhibits | and 2.

For the reasons discussed in Plaintiffs’ request, and in light of new arguments raised by LSW on issues that exceed the scope of the Court’s requested supplemental briefing, the Court should afford Plaintiffs the opportunity to respond.

Counsel for Plaintiffs met and conferred with counsel for LSW concerning this motion, and LSW does not assent to the filing of the proposed Reply and related documents. Plaintiffs have styled their motion in the same manner as LSW styled its Motion for Leave To File a Substituted Supplemental Memorandum and

accordingly have not set the motion for hearing, which is in the Court’s discretion. DATED: October 5, 2012 KASOWITZ BENSON TORRES & FRIEDMAN LLP

By: _s/Brian P. Brosnahan Brian P. Brosnahan

PLAINTIFFS MOTION FOR LEAVE TO FILE A REPLY TO LSW’S SUBSTITUTED SUPPLEMENTAL MEMORANDUM; CASE NO. CV 10-9198 JVS (RNBX)

KASOWITZ, BENSON, TORRES & FRIEDMAN LLP

101 CALIFORNIA STREET, Suite 2300 SAN FRANCISCO, CALIFORNIA 941411

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MEMORANDUM OF POINTS AND AUTHORITIES [. INTRODUCTION Plaintiffs respectfully request leave to file a reply to LSW’s 18-page

substituted supplemental brief because it addresses issues outside the scope of the briefing permitted by the Court, includes entirely new arguments, submits incomplete deposition testimony, and misstates the record.

First, LSW’s substitute supplemental memorandum ignores the Court’s directive to the parties to limit their supplemental briefing to the issue of ascertainability. LSW has instead addressed other arguments that fall outside the scope of the Court’s Order, including citing authority on the merits of whether its illustrations are likely to deceive and, for the first time, attempting to distinguish Yokoyama v. Midland Nat’! Life Ins. Co., 594 F.3d 1087 (9th Cir. 2010), a decision cited by Plaintiffs in both their moving and reply papers, but not mentioned by LSW in its opposition papers or at oral argument.

Second, LS W’s substitute memorandum confuses the record. LSW’s discussion of the policy files (at pp. 5-11) blends misrepresentations with new and evolving positions in an attempt to confuse the Court about the state of the documentary record. For example, LSW continues to insist that 56% of file evidence conflicts, but its substitute brief deleted footnote 5 of LSW’s previous brief, which attempted falsely to justify LSW’s 56% calculation. Although LSW’s deletion of that footnote was appropriate, there is no longer any basis for its continued reliance on the inaccurate 56% figure.

Third, LS W’s substitute memorandum raises new and misleading arguments that contradict earlier positions that it took in its class certification opposition. LSW previously argued in its opposition papers that the date an illustration is used should be determined by the date the illustration was printed, but its substitute brief

takes the new and inconsistent position that the print date should be ignored.

PLAINTIFFS MOTION FOR LEAVE TO FILE A REPLY TO LSW’S SUBSTITUTED SUPPLEMENTAL MEMORANDUM;; CASE NO. CV 10-9198 JVS (RNBX)

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Fourth, Plaintiffs are entitled to respond under the rule of completeness. LSW relies on a snippet of deposition testimony to advance inaccurate assertions about the named Plaintiffs.

Finally, Plaintiffs should be provided with the opportunity to close the briefing on their motion particularly in light of the Court’s decision to allow LSW to file a substitute memorandum after the parties complied with the Court’s original directive of simultaneous filing. Fairness dictates that since LSW has been now granted the opportunity to respond to Plaintiffs’ brief, Plaintiffs should be afforded the same opportunity.

Il. THE COURT POSSESSES DISCRETION TO AFFORD PLAINTIFFS

THE OPPORTUNITY TO SUBMIT A REPLY BRIEF

Though the Court’s minute order indicates that the matter is deemed submitted after both parties’ filing of their supplemental briefs, numerous courts have recognized that the exercise of “the Court's exercise of discretion in favor of allowing a surreply is appropriate where the movant raises new arguments in its reply brief.”' Though these authorities are in the context of surreplies, the principles of fairness animating the decisions are equally applicable to the supplemental briefing at issue here. Indeed, after both parties filed their supplemental briefs on September 25, 2012, and the matter was “deemed submitted,’ LSW filed a request for leave to file a substitute brief, and the Court exercised its discretion to allow its filing (without providing Plaintiffs the opportunity to oppose the motion). For the reasons discussed herein, the Court

should similarly exercise its discretion by allowing Plaintiffs to close the briefing

' Concerned Citizens for a Safe Cmty. v. Office of Fed. Detention Trustee, 2011 U.S. Dist. LEXIS 122899 *4 (D. Nev. Oct. 24, 2011) (citing Heffelfinger v. EDSC., 580 F. Supp. 2d 933, 966 n.116 (C.D. Cal. Pao see also CY. sitter, LLC v. P.R.C., 805 F. Supp. 2d 958, 964 (C.D. Cal. 2011) (granting leave to file surreply “because Defendants relied on new legal authority in their reply papers’).

PLAINTIFFS MOTION FOR LEAVE TO FILE A REPLY TO LSW’S SUBSTITUTED

SUPPLEMENTAL MEMORANDUM; CASE NO. CV 10-9198 JVS (RNBX) 2

KASOWITZ, BENSON, TORRES & FRIEDMAN LLP

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with the reply filed herewith.”

Il. PLAINTIFFS SHOULD BE PROVIDED THE OPPORTUNITY TO RESPOND BECAUSE LSW’S BRIEF RAISES NEW ARGUMENTS OUTSIDE THE SCOPE OF THE REQUESTED BRIEFING A. LSW’s Brief Exceeds The Scope Of The Court’s Order.

The Original and Amended Orders both stated that the parties “shall file the supplemental submission discussed on the record.’ The only supplemental submission discussed on the record concerned the ascertainability issue, about which the Court requested argument in its tentative ruling. The parties were therefore clearly instructed to limit their supplemental briefing to the topic of ascertainability, and specifically, to the nature of LSW policyholder files and to whether it will be administratively feasible to determine subclass membership based on these files and other case management techniques. Notwithstanding the Court’s instructions, LSW’s filing contains new arguments that have nothing to do with the identification of class members. For example, the first argument section of LSW’s substitute memorandum is dedicated entirely to raising arguments relating to predominance and reliance, arguing that it is improper to adjudicate common law fraud and UCL claims without examining the “the entire universe of what was conveyed to each policyholder.”* Indeed, LSW submits briefing on Davis v. HSBC, 2012 U.S. App. LEXIS 18503 (9th Cir. Aug. 31, 2012), a case that discusses the likely to deceive test under the UCL and not once touches on

ascertainability or determination of class membership. LSW also—for the first

* Transp. —" Assocs. v. Textron Fin. ro 2005 U.S. Dist. LEXIS 28634, *11 (D. Az. Nov. I6, 2005) (granting leave to file surreply because it “affords [plaintiff] an 6 eter Pd to respond to the new argument [in the reply] and cures any prejudice from its lateness.”).

: Original Order, Dkt. 338, at 1; Amended Order, Dkt. 341, at 1 (emphasis added). * LSW’s Substitute Supplemental Memorandum In Opposition to Class

Certification (Dkt. 346) (““LSW’s Sub. Mem.”), at 3.

PLAINTIFFS MOTION FOR LEAVE TO FILE A REPLY TO LSW’S SUBSTITUTED

SUPPLEMENTAL MEMORANDUM; CASE NO. CV 10-9198 JVS (RNBX) 3

KASOWITZ, BENSON, TORRES & FRIEDMAN LLP 101 CALIFORNIA STREET, SuiTe 2300

SAN FRANCISCO, CALIFORNIA 94111

Case

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time—addresses and attempts to distinguish Yokoyama vy. Midland Nat'l Life Ins. Co., 594 F.3d 1087 (9th Cir. 2010), a controlling decision regarding reliance that was cited by Plaintiffs in both their moving and reply papers, but not mentioned by LSW in its opposition papers or at oral argument.’ Not only are LSW’s attempts to distinguish Yokoyama unavailing, they are plainly not within the scope of the briefing.

B. |LSW’s Substitute Brief Is Misleading And Attempts To Confuse

The Record And The Court.

At oral argument, the Court questioned whether the reference to the “policy applied for” in the LSW application means the particular type of policy applied for, such as Paragon or Provider. LSW had not previously suggested this, and counsel for Plaintiffs responded that the phrase “policy applied for’ referred to the particular configuration of the policy, e.g., face amount, planned premium, etc.

Apparently seizing on the Court’s question, LS W’s first supplemental brief argued that “[t]he more plausible reading of the language means what it says — ‘the policy applied for’ is Paragon or Provider.” But as demonstrated in Plaintiffs’ supplemental brief, the NAIC regulation and LSW’s own executives make clear that the “policy applied for” refers not simply to the type of policy but to the particular configuration of the policy, encompassing specifics such as face amount, underwriting class, planned premium, etc. LSW’s assertion that the most plausible reading is that the policy applied for is Paragon or Provider was grossly misleading because the question is not what is a “plausible reading” of the words (which are derived from the NAIC model regulation enacted as California Insurance Code

section 10509.958(a)), but how LSW actually interprets and applies those words,

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Id. at 3-4. °LSW’s se, MONEY Memorandum In Opposition to Class Certification, filed September 25, 2012 (Dkt. 340) at 6 n.5.

PLAINTIFFS MOTION FOR LEAVE TO FILE A REPLY TO LSW’S SUBSTITUTED SUPPLEMENTAL MEMORANDUM; CASE NO. CV 10-9198 JVS (RNBX)

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in its day to day processing of policy applications. LSW has been applying this regulation for decades, and its corporate executives (none of whom submitted testimony in support of the newly minted assertion of its counsel) are well aware that “the policy applied for” is not “Paragon or Provider,” but the particular configuration of the policy (even including details like specification of the name of the agent).

After reviewing Plaintiffs’ supplemental brief, LSW apparently decided to delete this argument from its substitute brief.’ But having deleted this argument, LSW is left with no basis for its calculation that 56% of the file evidence conflicts. Yet LSW’s substitute brief continues to advance the incorrect 56% calculation in an attempt to confuse the record and the Court.

Similarly, whereas Plaintiffs submitted as Exhibit A to the Supplemental Dinglasan Declaration (Dkt. 339) a policy-by-policy description of all 400 policy files, LSW responds only with aggregated data on entirely separate topics that are irrelevant to the question of whether a policyholder received a sales illustration. As discussed in Plaintiffs’ proposed reply, this approach confuses the record by

suggesting purported conflicts that do not in fact exist.

C. LSW’s Substitute Brief Takes New And Inconsistent Positions

LSW’s substitute brief also raises new arguments that are inconsistent with positions previously advanced in the litigation. For example, for the first time LSW argues that it is improper to rely on illustration print dates as evidence of

use—directly reversing and contradicting its earlier position that used illustration

"Tn addition to the cites in Plaintiffs’ original supplemental brief, other documents produced by LSW in discovery and the testimony of its own executives at deposition further confirm that the policy “as applied for” refers to the configuration of features such as underwriting or funding. [Proposed] Second Supplemental Declaration of Lesa Dinglasan, Exs. C, D & E.

PLAINTIFFS MOTION FOR LEAVE TO FILE A REPLY TO LSW’S SUBSTITUTED SUPPLEMENTAL MEMORANDUM; CASE NO. CV 10-9198 JVS (RNBX)

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print dates to determine the date of use. Indeed, this methodology was the foundation of Mr. Perla’s calculations in his declaration submitted in opposition to Plaintiffs’ motion to certify. As this is an entirely new and inconsistent argument, Plaintiffs should be afforded the opportunity to respond. D. Plaintiffs Should Be Provided Leave To File A Reply Pursuant To The Rule Of Completeness.

LSW’s substitute brief relies on a single page of deposition testimony to advance the new assertion that “Howlett and Spooner received illustrations prepared July 27, 2007, but neither signed until July 30, 2007” and that “Ms. Spooner was unsure whether she first saw the illustration before or after she dictated her application.” LSW’s Sub. Mem. at 6 n.7. But the experience of Mr. Howlett and Ms. Spooner is telling: their sales illustrations were printed on July 27, 2007 and were first reviewed and signed on July 30, 2007 in the same single meeting with their agent during which their applications were prepared and signed; their agent then submitted the illustrations and the applications to LSW.” Plaintiffs should be allowed to respond under the rule of completeness. In the words of one court, a party is “certainly entitled to supplement the record with other portions of [a witnesses’ testimony] to rebut and give context to the excerpts cited in [the other

parties’ | supplemental brief.” _

E. The Changed Nature of LSW’s Substitute Brief Justifies Allowing a Reply from Plaintiffs Because Plaintiffs Are The Moving Party

As mentioned above, LSW has raised numerous new arguments outside the

scope of the issues upon which the Court requested supplemental briefing. LSW

; Declaration of Timothy Perla Concerning Policy Sample at {| 7-10.

See Howlett Decl. Ex. A (Dkt. 231-1); Spooner Decl. Ex. A (Dkt. 232-1); Shapiro Decl. (Dkt. 265) Ex. J; Supp. Dinglasan Decl. Ex. B (Dkt. 339-2); [Proposed] Second Supplemental Dinglasan Decl. Exs. B & F.

10 MShift, Inc. v. DIC, 747 F. Supp. 2d 1147, 1178 (N.D. Cal. 2010).

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KASOWITZ, BENSON, TORRES & FRIEDMAN LLP

101 CALIFORNIA STREET, SUITE 2300 SAN FRANCISCO, CALIFORNIA 94111

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should not be allowed to use the Court’s request for narrow supplemental briefing as an excuse to raise new and out-of-scope arguments, without affording Plaintiffs a chance to reply. |

This is particularly true because the Court’s statements at oral argument and in the Original Order created a common seven-day deadline upon which the parties would file simultaneous supplemental briefs—which the parties did, in fact, file on September 25, 2012. At the close of the hearing, in response to a query from Charles Freiberg, counsel for Plaintiffs, the Court stated that Plaintiffs would be granted seven days to submit their supplemental brief.'* Jonathan Shapiro, counsel for LSW, then asked “can we have seven also” to submit a brief.'° The Court thus granted LSW the same seven days as it had granted Plaintiffs. Nothing about the exchange suggested that LSW’s time to submit its supplemental brief would be measured in addition to Plaintiffs’ time, or that LSW would have both the opportunity to respond to Plaintiffs’ submission and have the final word on Plaintiffs’ motion. In its Original Order, the Court confirmed the unambiguous record in ordering: “Counsel shall file the supplemental submission discussed on the record not later than September 25, 2012.”"*

If LSW had requested an opportunity for seven days to oppose Plaintiffs’ supplemental brief, Plaintiffs would have requested an opportunity to Reply because it is Plaintiffs’ motion. Allowing LSW to substitute a new brief pursuant to the Amended Order changes the nature of this briefing; rather than simultaneous

briefs, LSW has filed a responsive 18 page opposition to Plaintiffs’ brief. Under

'' Cf In re Hitachi, 2011 U.S. Dist. LEXIS 90882, *12-14 (S.D. Cal. Aug. 12, 2011) (granting plaintiffs leave to file sur-reply where defendant raised new arguments in reply brief).

? Sept. 18 Tr. at 66:21-67:1 (emp. added).

° Id. at 67:3-4.

+ See Original Order, Dkt. 338, at 1.

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normal motion practice, Plaintiffs would be entitled to file a reply brief in support of their motion.'” Fairness dictates that since LSW has now been granted the opportunity to respond to Plaintiffs’ brief, as the moving party on class certification, Plaintiffs should be afforded the same opportunity to reply. VI. CONCLUSION

In light of the above, Plaintiffs respectfully request that they be granted leave to file the reply brief, and supporting documents, attached as an exhibit

herewith.

| DATED: October 5, 2012 KASOWITZ BENSON TORRES & FRIEDMAN

LLP

By: _s/Brian P. Brosnahan Brian P. Brosnahan

IS See L.R. 7-4, 7-9, 7-10.

PLAINTIFFS MOTION FOR LEAVE TO FILE A REPLY TO LSW’S SUBSTITUTED SUPPLEMENTAL MEMORANDUM; CASE NO. CV 10-9198 JVS (RNBX)

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