Case 2:10-cv-09198-JVS -RNB Document 348-1 Filed 10/05/12 Page1of24 Page ID #:15314 EXHIBIT 1: [PROPOSED] REPLY TO LSW’S SUBSTITUTED SUPPLEMENTAL MEMORANDUM KASOWITZ, BENSON, TORRES & FRIEDMAN LLP 101 CALIFORNIA STREET, SuiTe 2300 SAN FRANCISCO, CALIFORNIA 94111 Case 2:110-cv-09198-JVS -RNB Document 348-1 Filed 10/05/12 Page 2of24 Page ID #:15315 KASOWITZ, BENSON, TORRES & FRIEDMAN LLP CHARLES N. FREIBERG (SBN 70890 BRIAN P. BROSNAHAN (SBN 112894) JACOB N. FOSTER (SBN 0785) 101 California Street, Suite 2300 San i scelege California 94111 Telephone: 4 15) 421-6140 Facemile: (415) 398-5030 LEVINE & MILLER HARVEY R. LEVINE e BN 61879) CRAIG A. MR A N 116030) LEVINE & MILLE 550 West C Street, Suite 1810 San Diego, CA 92101-8596 Telep hone. . 19) 231-9449 paeeinile (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 CLASS ACTION HOWLETT, and MURIEL ee SPOONER, on behalf of themselves CASE NO.: CV 10-9198 JVS (RNBx) and all others similarly situated, ia Case No.: 3:10-cv -04852 Plaintiffs, - from Northern District of California PROPOSED] PLAINTIFFS’ REPLY LIFE INSURANCE COMPANY OF | ‘TO LSW’S SUBSTITUTE bare eraen SUPPLEMENTAL MEMORANDUM | Sita aaa Defendant. | CERTIFICATION District Judge James V. Selna Date: aor 18, 2012 Court: [PROPOSED] PLAINTIFFS’ REPLY TO LSW’S SUBSTITUTE SUPPLEMENTAL MEMORANDUM ase No. CV 10-9198 JVS (RNBx) 1 KASOWITZ, BENSON, TORRES & FRIEDMAN LLP 101 CALIFORNIA STREET, SurTE 2300 SAN FRANCISCO, CALIFORNIA 94111 Case 2:10-cv-09198-JVS -RNB Document 348-1 Filed 10/05/12 Page3of24 Page ID 12 13 14 15 16 #:15316 TABLE OF CONTENTS Page I. LSW’S ARGUMENTS ABOUT YOKOYAMA ARE UNAVAILING ..... eee eeeeneees 1 Il. LSW’S ARGUMENTS ABOUT DAVIS ARE UNAVAILING ..... cece eeceeeceeteeeeeeeeeesnees 3 fl. LSW’ S CHANGING POSITIONS CANNOT HIDE THE FACT THAT THE POLICY FILES CONTAIN LITTLE CONFLICTING INFORMATION. .....0.... ccc ccecsceseeseeseeeeeees 4 A. LSW’S NEW POSITION THAT PRINT DATES ARE IRRELEVANT IS TOE Espa secitedepressu tin tecndedeane serie isessanesiagunienaaeenaae Saas anes team guansreeles 7 B. THE PRESENCE OF A SIGNED BATCH ILLUSTRATION IN A FILE IDOES NOT MEAN THAT NO SALES ILLUSTRATION WAS USED... 10 C. LSW IGNORES THE EVIDENCE CONCERNING AGENT’S REPORTS. ..... 11 D. THE APPLICATIONS CREATE FEW, IF ANY, CONFLICTS. ...... ee 12 IV. LSW MISCONSTRUES YOUNG V. NATIONWIDE MUTUAL INS. CO. wo..cccccceceseeees 13 V. ASIMPLE QUESTIONNAIRE CAN DETERMINE SUBCLASS MEMBERSHIP. .... 14 VI. LSW IS INCORRECT THAT THE CLASS IS NOT ASCERTAINABLE. ...........0000. 17 [PROPOSED] PLAINTIFFS’ REPLY TO LSW’S SUBSTITUTE SUPPLEMENTAL MEMORANDUM ase No. CV 10-9198 JVS (RNBx) i KASOWITZ, BENSON, TORRES & FRIEDMAN LLP 101 CALIFORNIA STREET, Suite 2300 SAN FRANCISCO, CALIFORNIA 94111 Case 2:110-cv-09198-JVS -RNB Document 348-1 Filed 10/05/12 Page 4 of 24 #:15317 | 2 TABLE OF AUTHORITIES 3 4 CASES 5 || Andrews Farms v. Calcot, : 258 F.R.D. 640 (E.D. Cal. 2009)............ceccccsssccssnsesstcesssressseeeesees 7 Balasanyan v. Nordstrom, Inc., 2012 U.S. Dist. LEXIS 74777 (S.D. Cal. May 30, 2012)............. 8 Boundas v. Abercrombie & Fitch Stores, Inc., 9 280 F.R.D. 408 (ND. Ill. 2012) .eeccecscesssescsscsscesseeseesssecstssseesseensee 10 Chesner v. Stewart Title Guar. Co., 1] 2008 U.S. Dist. LEXIS 19303 (N.D. Oh. Jan. 23, 2008).............. 121 Davis v. HSBC, 13 2012 U.S. App. LEXIS 18503 (9th Cir. Aug. 21, 2012)... 14 | Ellis v. Costco Wholesale Corp., 1S 2012 U.S. Dist. LEXIS 137418 (N.D. Cal. Sept. 25, 2012).......... 16 || Hinckley v. Bechtel Corp., 41 Cal. App. 3d 206 (1974) ....cccccssccsssssessscssssseeseccsssneveccessenescsesen 1g | are Blood Reagents Antitrust Litig., 2012 U.S. Dist. LEXIS 118727 (E.D. Pa. Aug. 22, 2012)............ 19 In re Brazilian Blowout Litig., sa 2011 U.S. Dist. LEXIS 40158 (C.D. Cal. Apr. 12, 2011)... 21 In re Methyl Tertiary Butyl Ether Prods. Liab. Litig., 22 209 FD, 323 (SDNY 5 2002) von cceccssssrratersncermeccerieideiatens 231 Imre Phenylpropanolamine (PPA) Prod. Liab. Litig., 24 214 F.R-D. G14. CW.D. Wash. 2003) cxcecsscasentvacaoediatvsesasvieenamenetnrads 25 || Kennedy v. Jackson Nat'l Life. Ins. Co., 6 2010 U.S. Dist. LEXIS 63604(N.D. Cal. June 23, 2010) ............. 27 || Kern v. Siemens Corp., BOS PSE L202 Cit DOOR) seta ctcesstenanscesncagexcduacepleatenilentitinest cunt Page ID Page(s) [PROPOSED] PLAINTIFFS’ REPLY TO LSW’S SUBSTITUTE SUPPLEMENTAL MEMORANDUM ase No. CV 10-9198 JVS (RNBx) ii KASOWITZ, BENSON, TORRES & FRIEDMAN LLP 101 CALIFORNIA STREET, Suite 2300 SAN FRANCISCO, CALIFORNIA 94111 Case 2:110-cv-09198-JVS -RNB Document 348-1 Filed 10/05/12 Page5of24 Page ID #:15318 Kohen v. Pac. Inv. Mgmt. Co. LLC, SP AG6 2 UC 2009) sieweenscaenaraet anne arees Roderick v. XTO Energy, Inc., OBL R47 TD 6 20 2) eccmctieeesae ima creaeatens 17 Shurland v. Bacci, ZL FRA, P99 Ne Ts 2010) vcsrcostnsicdcoicavshsiaria vats diatasnedaaaornmunaetaads 13 Stone v. Advance Am., Cash Advance Ctrs. Inc., 278 Re O62 a Cal 0D cs erties 18 Wal-Mart Stores, Inc. v. Dukes, ROE SCE 2541 1201 D) irciensaraeevedwsuusnrancteciianiainamatentacaar 17,18 Yokoyama v. Midland Nat’l Life Ins. Co., 594 F.5d 1087 (Oth Cir 2008) acne aicicc csi caine nresimanisunrnnineniaaes 1 Young v. Nationwide Mut. Ins. Co., 2012 U.S. App. LEXIS 18625 (6th Cir. Sept. 5, 2012). cccssccisssacsvicerscassesensess 13 STATUTES Cal. 1HS 0dS SUOS09 SS GCE) sa sectenncansicastevandecnesnera ears eecanshiedere Minette 2 [PROPOSED] PLAINTIFFS’ REPLY TO LSW’S SUBSTITUTE SUPPLEMENTAL MEMORANDUM ase No. CV 10-9198 JVS (RNBx) ili KASOWITZ, BENSON, TORRES & FRIEDMAN LLP 101 CALIFORNIA STREET, SulTE 2300 SAN FRANCISCO, CALIFORNIA 94111 Case 2:1j0-cv-09198-JVS -RNB Document 348-1 Filed 10/05/12 Page6of 24 Page ID #:15319 Oo fe NSN DH WA & I. LSW’S ARGUMENTS ABOUT YOKOYAMA ARE UNAVAILING LSW contends that this Court should refuse to follow Yokoyama v. Midland Nat'l Life Ins. Co., 594 F.3d 1087, 1093 (9th Cir. 2008) because the insurance company in that case prohibited its agents from making oral statements that “differ in any significant manner” from written documentation, while LSW prohibits its agents from making statements “that are inconsistent.” LSW’s Substitute Supplemental Memorandum in Opposition to Class Certification (Dkt. 346) (““LSW’s Sub. Memo.”) at 3-4. This is a distinction without a difference. The Ninth Circuit in Yokoyama interpreted the insurer’s certification as requiring agents “to certify that nothing was said that is inconsistent” — the exact requirement imposed by LSW on its agents. Yokoyama, 594 F.3d at 1090. Nothing about the wording of the respective certifications calls into question the Ninth Circuit’s rationale that claims resting on written documentation “avoids individual variance” and means that certification “does not require the fact-finder to parse what oral representations each broker made to each plaintiff.” Jd. at 1093." LSW’s contention that oral disclosures by agents “supplement the illustration” also ignores the record: e Volatility and Tax: There is no evidence that an agent made even a single policyholder aware of the extremely high likelihood of lapse and the interaction between policy design and either market volatility or the tax laws. Pls. Reply at 2-4. e Fees: There is no evidence that any agent dispelled the illustration’s representation that the specified amount of the Monthly Administrative Charge (the “One Policy Fee” identified in the illustration) includes all fees. ' LSW also cites Fairbanks and Kaldenbach, but as Plaintiffs explained in their Opening and Reply briefs, neither case considered the certification requirement discussed in Yokoyama, and the plaintiffs in those cases could not argue that oral representations were irrelevant because their claims were based on oral representations made to them by agents. Pls. Op. Br. at 18-19, Pls. Reply at 8-9. [PROPOSED] PLAINTIFFS’ REPLY TO LSW’S SUBSTITUTE SUPPLEMENTAL MEMORANDUM ase No. CV 10-9198 JVS (RNBx) 1 KASOWITZ, BENSON, TORRES & FRIEDMAN LLP 101 CALIFORNIA STREET, Suite 2300 SAN FRANCISCO, CALIFORNIA 94111 Case 4:10-cv-09198-JVS -RNB Document 348-1 Filed 10/05/12 Page 7 of 24 Page ID #:15320 LSW asserts that Ms. Walker’s agent disclosed policy fees,’ but LSW submitted no evidence from Ms. Walker’s agent, and her testimony remains undisputed that he never dispelled the false impression that the stated amount of the Monthly Administrative Charge (the One Policy Fee depicted in the illustration) included all fees. Walker Dec. 995, 12; Walker Reply Dec. 44. Guarantee: There is no evidence that any agent disclosed that the guaranteed values in the illustrations are overstated because they are based on true annual (i.e., prospective) crediting, or that the representation in the illustration is false that “[t]he policy as illustrated on a guaranteed basis will provide coverage for [a certain number of policy years],” or that no guaranteed interest would be provided upon lapse. Monthly Administrative Charge (“MAC”) Reduction: If, as LSW suggests, some agents disclose that the reduction is not guaranteed, this would not supplement the illustration, but contradict it, and LSW does not dispute that it should be estopped from relying on an argument that a handful of agents may have contradicted the illustration. Current Basis: There is no evidence that any agent disclosed that the Current Basis values are significantly inflated by inclusion of nonguaranteed benefits not currently provided, and, indeed, California law requires that if a non-guaranteed element, such as the Account Value Enhancement (“AVE”) is mentioned in an illustration, it must be “described in the contract.” Cal. Ins. Code §10509.956(e). Thus, even if an agent told a policyholder that the AVE is not currently provided to anyone, LSW’s illustration would still violate the statute because the AVE is referenced nowhere in the contract. Brosnahan Decl. Ex. M (Dkt. 227-1). LSW also contends that its requirement that agents not make statements inconsistent with the illustration renders agents superfluous, but this argument is frivolous. Plaintiffs do not dispute that agents can provide information so long as it is not inconsistent with the illustration. The uncontroverted testimony by the named Plaintiffs and evidentiary record in this case demonstrates that none of the information provided by agents contradicted the illustration or dispelled the deceptions that are the basis of Plaintiffs’ claims. * LSW concedes sub silentio that Ms. Walker’s agent did not disclose information that was relevant to any of her other claims. [PROPOSED] PLAINTIFFS’ REPLY TO LSW’S SUBSTITUTE SUPPLEMENTAL MEMORANDUM Case No. CV 10-9198 JVS (RNBx) 2 KASOWITZ, BENSON, TORRES & FRIEDMAN LLP 101 CALIFORNIA STREET, SuiTE 2300 SAN FRANCISCO, CALIFORNIA 94114 Case d4:10-cv-09198-JVS -RNB Document 348-1 Filed 10/05/12 Page 8of 24 Page ID #:15321 ad Il. LSW’S ARGUMENTS ABOUT DAVIS ARE UNAVAILING LSW’s citation to Davis v. HSBC, 2012 U.S. App. LEXIS 18503, *15 (9th Cir. Aug. 21, 2012) provides no grounds for denying certification. First, Davis held that determining whether a practice is deceptive involves an objective test that focuses on “the ordinary consumer acting reasonably under the circumstances.” Jd. at *13-14. This, of course, supports certification because it renders it unnecessary for the Court to inquire into individual consumers’ subjective understanding of the illustration. Second, Davis held that dismissal of the complaint was warranted under the facts of that case because no reasonable consumer was likely to be deceived by the defendant’s advertisements. In Davis, the advertisement contained no statement that was false, plaintiffs’ claim that a “reward” credit card implied that there was no offsetting fee “defie[d] common sense,” the named plaintiff was presented with an “Important Terms & Disclosure Statement” disclosing the annual fee prior to application, and he checked a box certifying that he accepted the terms and conditions (e.g., the fee) prior to submitting his credit card application. Jd. at *13-19. Unlike Davis, this Court already has held that LSW’s illustrations are deceptive and denied its motion for judgment on the pleadings; indeed, on this motion, LSW does not contest that the illustration is deceptive. Unlike Davis, the named Plaintiffs’ testimony is uncontroverted that they received no written (or oral) disclosures prior to their application that corrected the deception in the illustration. To the extent that LSW argues that its policy and Buyer’s Guide correct the deception in the illustration, this presents another common issue that supports certification because LSW requires that these same written disclosures be delivered to the class. Pls. Reply at 11-13 Notably, LSW has presented no evidence that even a single policyholder — let alone a significant number -- received any oral or written disclosure that corrected the deception in LSW’s illustration. Though the parties negotiated a [PROPOSED] PLAINTIFFS’ REPLY TO LSW’S SUBSTITUTE 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 @: 10-cv-09198-JVS -RNB Document 348-1 Filed 10/05/12 Page9of24 Page ID #:15322 script allowing LSW to contact absent class members, LSW submitted no evidence of individualized policyholder knowledge in connection with its opposition to Plaintiffs’ motion. LSW’s speculation that some unidentified class members received adequate disclosure is insufficient to defeat class certification, see In re Brazilian Blowout Litig., 2011 U.S. Dist. LEXIS 40158, *24-26 & n.10 (C.D. Cal. Apr. 12, 2011), particularly since even adequate disclosure to some manageable number of class members would be insufficient to upset the predominance of common issues and defeat class certification. Kohen v. Pac. Inv. Mgmt. Co. LLC, 571 F.3d 672, 677-78 (7th Cir. 2009); Kennedy v. Jackson Nat’l Life. Ins. Co., 2010 U.S. Dist. LEXIS 63604, *17-21(N.D. Cal. June 23, 2010) (“[T]he independent voluntary actions taken by a handful of Defendant’s agents do not defeat the predominance of common questions of fact concerning whether Defendant adequately disclosed this information.”’). Ill. LSW’ S CHANGING POSITIONS CANNOT HIDE THE FACT THAT THE POLICY FILES CONTAIN LITTLE CONFLICTING INFORMATION. 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. 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. That data, contained in the Supplemental Declaration of Timothy Perla, is addressed below, but it should be noted at the outset that nowhere does LSW quarrel with the accuracy of Exhibit A to the Supplemental Dinglasan Declaration or the policy counts based thereon. Instead, LSW tries a variety of tactics to confuse the issues. First, LSW tries to confuse matters by continuing to recite its statistic that 56% of policy files contain conflicting evidence of sales illustration use (see [PROPOSED] PLAINTIFFS’ REPLY TO LSW’S SUBSTITUTE SUPPLEMENTAL MEMORANDUM Case No. CV 10-9198 JVS (RNBx) 4 Case 2}/10-cv-09198-JVS -RNB Document 348-1 Filed 10/05/12 Page 10o0f24 Page ID #:15323 KASOWITZ, BENSON, TORRES & FRIEDMAN LLP 101 CALIFORNIA STREET, Suite 2300 SAN FRANCISCO, CALIFORNIA 94111 A Be OY ON Oo C©& ns NN Substitute Mem. at 5:10) even though that statistic is now discredited because LSW has withdrawn the position on which it was based. LSW’s 56% conflict statistic was based on the contention that a checked box in Part 7 of an application means that no sales illustration was used. See Perla Dec. Concerning Policy Sample (Dkt. 251) at J98-10. This 56% statistic was, in turn, recited in the Court’s tentative ruling (Sept. 14, 2012) at p. 28. Plaintiffs pointed out in oral argument and in their Supplemental Submission that a checked box does not in fact mean that no sales illustration was used because the box is supposed to be checked unless a signed illustration of the policy applied for is enclosed with the application and that even small changes in the configuration of the policy prevent an illustration from being of the policy applied for (e.g., a change in the face amount, underwriting class, or amount of planned periodic premium). Plaintiffs Submission Regarding Identification of Class Members (“Pls. Supp. Br.”) (Dkt. 339) at 4; Supp. Dinglasan Dec. (Dkt. 339-1) at 99 & Exs. F-G.> LSW’s Supplemental Memorandum filed on September 25, 2012 falsely asserted that the “policy applied for” means Provider or Paragon rather than the particular configuration of the policy encompassing specifics such as face amount, underwriting class, or planned premium.* LSW’s Supplemental Memorandum, filed Sept. 25, 2012, (Dkt. 340) (“LSW’s 9/25/12 Mem.”) at 6 n.5. As discussed in Plaintiffs’ Motion for Leave to File a Reply to LSW’s Substitute Memorandum, LSW’s substitute memorandum deleted its position that the “policy applied for” * Plaintiffs’ supplemental submission also demonstrated that agents often check the box in Part 7 of the application even when they used an illustration of the policy applied for because they must check that box unless they have obtained a signature on the illustration and have enclosed the illustration with the application. See Supp. Dinglasan Decl. at 79 & Exs. F-J. * LSW is wrong in asserting that “prior to the hearing, Plaintiffs’ class certification filings did not dispute LSW’s assertion that 56% of files have conflicting evidence. This was disputed in the Reply Dinglasan Declaration (Dkt. 294) at 410.b. [PROPOSED] PLAINTIFFS’ REPLY TO LSW’S SUBSTITUTE SUPPLEMENTAL MEMORANDUM Case No. CV 10-9198 JVS (RNBx) 5 Case 2}/10-cv-09198-JVS -RNB Document 348-1 Filed 10/05/12 Page 11of24 Page ID #:15324 KASOWITZ, BENSON, TORRES & FRIEDMAN LLP 101 CALIFORNIA STREET, SulTe 2300 SAN FRANCISCO, CALIFORNIA 94111 referred simply to the type of policy (e.g., Paragon or Provider), apparently because Plaintiffs’ Supplemental Memorandum (Dkt. 339), which was filed concurrently with LSW’s September 25, 2012 Supplemental Memorandum (Dkt. 340), conclusively debunked this falsehood with evidence from both Ms. MacDonald and an NAIC Q’s and A’s document from LSW’s files. See Pls. Supp. Br. (Dkt. 339) at99 & (Dkt. 339-1) Exs. F-G. > Thus, although LSW has now abandoned the position upon which its 56% statistic was based, LSW continues to use that statistic in an attempt to confuse the record and the Court. See LSW’s Sub. Mem. at 5:10. LSW also tries to confuse matters by claiming that Plaintiffs have revised a previous assertion that “they have found conflicting file evidence only 5% of the time” and “cannot seem to settle on what they think the files show.” LSW’s Sub. Mem. at 5:18-6:3. In fact, the two earlier Dinglasan declarations never attempted to count the percentage of files that contained conflicting evidence. Rather, they looked at what percentage of files contained one or more documents that indicated the use of a sales illustration. Those declarations asserted that in 68% of the policy files in the Sample one or more documents in the policy files showed the use of a sales illustration. Dinglasan Dec. (Dkt. 229) at 9-C; Dinglasan Reply Dec. (Dkt. 294) at 94 & 12. This is the same percentage attested to by Ms. Dinglasan in her Supplemental Declaration (Dkt. 339) at 43. Plaintiffs offered no evidence concerning the frequency of conflicting evidence until oral argument on September 18, when Plaintiffs represented that the policy files contained conflicts in fewer than 5% of cases. Plaintiffs’ supplemental > Additional documents demonstrating that LSW actually interprets the “policy applied for” to mean the particular configuration of the policy encompassing specifics such as face amount, underwriting class, planned premium, and even the name of the agent are submitted with the [Proposed] Second Supplemental Declaration of Lesa Dinglasan Reply to LSW’s Substitute Supplemental Memorandum (“Proposed SSDLD”), submitted herewith, at Exs. C-E. [PROPOSED] PLAINTIFFS’ REPLY TO LSW’S SUBSTITUTE SUPPLEMENTAL MEMORANDUM Case No. CV 10-9198 TVS (RNBx) 6 KASOWITZ, BENSON, TORRES & FRIEDMAN LLP 101 CALIFORNIA STREET, SuiTE 2300 SAN FRANCISCO, CALIFORNIA 94111 Case 21110-cv-09198-JVS -RNB Document 348-1 Filed 10/05/12 Page 12o0f24 Page ID #:15325 Oo © AT DN papers document the truth of that assertion even if the concept of a “conflict” is construed broadly. See Supp. Dinglasan Dec. (Dkt. 339-1) at 93 & 11. Itis LSW that is guilty of shifting positions, as LSW does again in now asserting that it is the signature date on an illustration that is evidence of illustration use rather than the print date. See Part IIA, infra. Before moving to the specific types of file evidence discussed by LSW, we note that LSW has also attempted to shift the terms of the debate by setting up a straw man: LSW repeatedly asserts that Plaintiffs contend that various pieces of documentary evidence constitute “conclusive” evidence of sales illustration use. See LSW’s Sub. Mem. at 5:10-11; 8:8-11; & 10:16-17. That has never been Plaintiffs’ position. Plaintiffs contend that for most policyholders (66.5% of the Sample to be precise) the policyholder files contain uncontradicted evidence that a sales illustration was used and that such evidence would be sufficient to sustain a given policyholder’s burden of proof of class membership. See Supp. Dinglasan Dec. (Dkt. 339-1) at 2:13-14. No plaintiff would be required to submit “conclusive” evidence of class membership. LSW is entitled to adduce contrary evidence but has failed to show that it could do so to any extent that could render determinations of class membership unmanageable. A. LSW’S NEW POSITION THAT PRINT DATES ARE IRRELEVANT IS INCORRECT. Although LSW previously treated the print date on an illustration as equivalent to the date of “illustration receipt,” it has now apparently abandoned that position and argues instead that only the signature date on an illustration is evidence of the receipt of the illustration and, further, “to the extent the files also contain unsigned illustrations as well, they offer no evidence concerning the timing of use (if any).” LSW’s Sub. Mem. at 6-8 & n.8. LSW offers no explanation for this about-face. As Plaintiffs pointed out in the Supplemental Dinglasan Declaration (Dkt. 339) at 94, Part III of the Perla Declaration Concerning Policy [PROPOSED] PLAINTIFFS’ REPLY TO LSW’S SUBSTITUTE SUPPLEMENTAL MEMORANDUM Case No. CV 10-9198 JVS (RNBx) 7 Case 2110-cv-09198-JVS -RNB Document 348-1 Filed 10/05/12 Page 13o0f24 Page ID #:15326 KASOWITZ, BENSON, TORRES & FRIEDMAN LLP 101 CALIFORNIA STREET, Suite 2300 SAN FRANCISCO, CALIFORNIA 94111 Sample (Dkt. 251) purported to analyze the “Relationship Between Application Date and Illustration Receipt” and treated the print date on an illustration as equivalent to the date of illustration receipt. LSW does not deny that this was its previous position, nor does it explain why it has suddenly concluded that the date an illustration was printed creates no inference that the illustration was printed in order to be used at that time.° LSW’s position makes no sense for two reasons. First, this case is about the use of illustrations in selling policies. It is not about obtaining signatures on them. As Plaintiffs previously demonstrated, the record is replete with evidence that agents use sales illustrations without ever getting them signed or submitting them to LSW; this includes the use of illustrations that they show to policyholders on a computer and never print out, and it also includes the use of illustrations that agents never bother to get signed and therefore do not submit to LSW. See, e.g., Pls. Supp. Br. (Dkt. 339) at 3-4 & Supp. Dinglasan Dec. (Dkt. 339-1) at 99 & Exs. F-J. LSW deals with this by simply sending a batch illustration out with the policy if no signed illustration has been received previously. See McDonald Dec. (Dkt. 262) at 916-17. And this is precisely why the statistic cited by LSW — the fact that 434 signed illustrations in the policy files had signature dates that fell after the print date (Supp. Perla Decl. (Dkt. 346-2) at 4) — means nothing. The great majority --364 -- of those illustrations have print dates that are after the issue date of the policy; these are necessarily batch illustrations.’ [Proposed] SSDLD at §2. ° Although LSW previously submitted evidence concerning the date of the illustration signature, LSW’s analysis was focused on comparing the illustration signature date to the date of policy receipt, see Perla Declaration Concerning Policy Sample (Dkt. 251) at §6, not the date of the policy application, which is the analysis that LSW now submits. Supp. Perla Decl. (Dkt. 346-2) at 994-5. 7 Another statistic cited by LSW — the median time between print date and signature date — is likewise irrelevant because agents have up to 75 days to deliver [PROPOSED] PLAINTIFFS’ REPLY TO LSW’S SUBSTITUTE SUPPLEMENTAL MEMORANDUM Case No. CV 10-9198 JVS (RNBx) 8 KASOWITZ, BENSON, TORRES & FRIEDMAN LLP 101 CALIFORNIA STREET, SUITE 2300 SAN FRANCISCO, CALIFORNIA 94111 Case 4:10-cv-09198-JVS -RNB Document 348-1 Filed 10/05/12 Page 140f24 Page ID #:15327 Moreover, the fact that a sales illustration might be signed after the print date proves nothing other than that some time passed between when the illustration was printed and when the consumer finally decided to apply for a policy that matched the particular illustration (thus triggering a requirement to sign the illustration and send it to LSW) or, alternatively, that the agent was tardy in complying with the requirement that he obtain and submit a signed sales illustration.® Second, the issue is not, as LSW contends, whether an unsigned illustration printed before the application was submitted was used on the same day it was printed. Rather, the issue is whether the unsigned illustration was used before the application was submitted. All of the unsigned illustrations at issue were submitted by agents for LSW to keep in its files. LSW advances no reason why an agent would print an illustration during the sales process (i.e., before an application is submitted) and then send it to LSW even though the illustration was never used with the applicant.’ LSW had it right the first time — if an illustration was printed during the sales process and was submitted to LSW by the agent, an inference arises that the illustration was used in the sales process (even if not necessarily on the exact day it was printed). The experience of Mr. Howlett and Ms. Spooner is telling: their sales illustrations were printed on July 27, 2007 and were reviewed and signed on July 30, 2007 in the same meeting during which their applications the policy and the batch illustration and obtain signatures thereon. Declaration of Brian P. Brosnahan in Support of Motion for Class Certification, at Dkt. 227-1, Ex. E, BPB 86. ® The Supplemental Perla Declaration (Dkt. 346-2) is incorrect in asserting that 30 sales illustrations bear a signature date after the application. In fact there are four, which are listed in the Proposed SSLDD at 4. ? LSW asserts without benefit of evidence that “agents do very often print an illustration prior to application, but do not use it until after.” LSW’s Sub. Mem. at 7:16-17. Even if this dubious proposition were true, it would not explain why the agent would submit such an illustration for LSW’s files. [PROPOSED] PLAINTIFFS’ REPLY TO LSW’S SUBSTITUTE SUPPLEMENTAL MEMORANDUM Case No. CV 10-9198 JVS (RNBx) 9 Case 2410-cv-09198-JVS -RNB Document 348-1 Filed 10/05/12 Page 15o0f24 Page ID #:15328 KASOWITZ, BENSON, TORRES & FRIEDMAN LLP 101 CALIFORNIA STREET, SuITE 2300 SAN FRANCISCO, CALIFORNIA 94111 were prepared and signed; '° their agent then submitted the illustrations and the applications to LSW."! B. THE PRESENCE OF A SIGNED BATCH ILLUSTRATION IN A FILE DOES NOT MEAN THAT NO SALES ILLUSTRATION WAS USED. LSW tries to confuse matters further by pointing to signed batch illustrations as somehow creating confusion about whether a sales illustration was used. Thus, LSW points to the fact that Joyce Walker signed a batch illustration. It is true that Ms. Walker did not recall ever signing the batch illustration, but this is irrelevant to the uncontested fact that she received and relied on a pre-application sales illustration dated October 3, 2007. See Pls. Supp. Br. (Dkt. 339) at 4 & Supp. Dinglasan Decl. (Dkt. 339-1) at 99 & Exs. H-J. LSW falsely asserts that “twice in Plaintiffs’ filing they emphasize that it would be improper to look only at Ms. Walker’s file given that she cleared up the obvious factual inconsistency in her ‘Declaration’ and her ‘testimony.’” LSW’s Sub. Mem. at 8 n.9, citing Pls. Mem. at 4. Plaintiffs do not contend that it would be improper to look only at Ms. Walker’s file, which contains uncontradicted evidence that she received a sales illustration, nor is there any factual inconsistency between her “declaration” and her “testimony.” Plaintiffs point to Ms. Walker’s declaration and testimony solely to expose the disingenuous assertions by LSW that there is some dispute about whether she received a sales illustration. LSW has produced not a shred of evidence suggesting that Ms. Walker did not receive a sales illustration, and there is no need to look beyond her policy file to see that she '° It makes no difference whether Ms. Spooner provided information for her application before reviewing her illustration, or vice versa, because she reviewed the illustration and prepared her application in the same meeting, and the application was submitted after the meeting was finished. '' Howlett Dec. Ex. A (Dkt. 231-1); Spooner Dec. Ex. A (Dkt. 232-1); Shapiro Dec. Ex. J (Dkt. 265) Ex. J; Supp. Dinglasan Dec. Ex. B (Dkt. 339-2); [Proposed] SSDLD Exs.B & F (Spooner Depo. at 231-32). [PROPOSED] PLAINTIFFS’ REPLY TO LSW’S SUBSTITUTE SUPPLEMENTAL MEMORANDUM Case No. CV 10-9198 JVS (RNBx) 10 Case KASOWITZ, BENSON, TORRES & FRIEDMAN LLP 101 CALIFORNIA STREET, Suite 2300 SAN FRANCISCO, CALIFORNIA 94111 10-cv-09198-JVS -RNB Document 348-1 Filed 10/05/12 Page 16o0f24 Page ID #:15329 received a sales illustration. C. LSW IGNORES THE EVIDENCE CONCERNING AGENT’S REPORTS. While LSW purports to be filing a memorandum that is responsive to Plaintiffs’ September 25 submission (Dkt. 339), in fact LSW fails to respond to Plaintiffs’ points concerning agents’ reports. For example, LSW asserts that there are 33 instances in which an agent’s report lists various materials that were used in the sale, other than an illustration (including a reference to ICS or Quik-Calc), and asserts that this must be taken as affirmative evidence that no illustration was used. LSW’s Sub. Mem. at 9 & Supp. Perla Decl. (Dkt. 346-2) at 93. LSW ignores the evidence from its own witness, Victoria McDonald, that “[i]n my experience, however, agents list only a small subset of all the documents that they actually showed or provided to the applicant. Therefore, it would not be possible, from reviewing the agent report, to get a complete (or even partially complete) sense of all the documentation that was given to applicants.” McDonald Decl. (Dkt. 262) at 48. Although Plaintiffs pointed to this testimony as the reason why Plaintiffs did not count agent’s reports that did not state “N/A” or “None” as reports that negated the use of a sales illustration (see Supp. Dinglasan Decl. (Dkt. 339-1) at 47), LSW fails to respond to this point or discuss Ms. McDonald’s testimony. LSW also fails to note that few of the 33 agent’s reports to which it refers create any conflict in the policy files about whether an illustration was used because a large majority of those 33 files did not contain any other evidence of whether a sales illustration was used. As set forth in the [Proposed] Second Supplemental Declaration of Lesa Dinglasan, submitted herewith, only seven of the policy files that listed materials other than an illustration (or ICS or Quik-Calc) contained other documentary evidence that a sales illustration was used. In six of those cases, a complete or partial copy of the sales illustration was present in LSW’s files; in the seventh case, the box in Part 7 of the application was not [PROPOSED] PLAINTIFFS’ REPLY TO LSW’S SUBSTITUTE SUPPLEMENTAL MEMORANDUM Case No. CV 10-9198 JVS (RNBx) 11 Case 2 KASOWITZ, BENSON, TORRES & FRIEDMAN LLP 101 CALIFORNIA STREET, SuiTE 2300 SAN FRANCISCO, CALIFORNIA 94111 0-cv-09198-JVS -RNB Document 348-1 Filed 10/05/12 Page 17 of 24 Page ID #:15330 checked. [Proposed] SSDLD at §2. Thus, even if agent’s reports that list materials other than an illustration (or ICS or Quik-Calc) are interpreted as stating affirmatively that no sales illustration was used, the total number of conflicts in the policy files is still only 13 out of 400, or 3.25%. Id. LSW also argues that a reference in an agent’s report to “ICS” or “Quik- Calc” does not constitute evidence “that a sales illustration was sent to an applicant.” LSW’s Sub. Mem. at 9:18-10:10. However, LSW fails to address the point made by Plaintiffs in their Supplemental Submission that the Insurance Code requires that any policyholder who was shown a partial illustration on computer, whether in the form of a partial ICS illustration or a Quik-Calc, must be given a complete illustration and that this creates at least an inference or a “strong disputable presumption” that the policyholder also was given a complete copy of the illustration. See Pls. Supp. Br. (Dkt. 339) at 5:10-6:3 (quoting Hinckley v. Bechtel Corp., 41 Cal. App. 3d 206, 212-13 (1974)). D. THE APPLICATIONS CREATE FEW, IF ANY, CONFLICTS. Now that LSW has abandoned its position that a checked box in Part 7 of the application means that no sales illustration was used, LSW mounts only weak arguments concerning applications. First, it asserts “that if the box in Part 7 is unchecked but no illustration appears in the file, that is a conflict in need of fact- finding.” LSW’s Sub. Mem. at 10:20-21. As Plaintiffs have pointed out, this should not be viewed as a conflict given the deficiencies in LSW’s recordkeeping, which LSW itself described as “all over the lot.” see September 18, 2012 Hearing Transcript at 35:21-23. It should thus be no surprise that some files that should contain a signed sales illustration do not in fact contain them. In any event, there were only 14 such files, and, even if all of these files are counted as conflicts, the policy files still contain conflicting evidence of sales illustration use in less than 5% ofthe Sample. Supp. Dinglasan Decl. (Dkt. 339) at 411. [PROPOSED] PLAINTIFFS’ REPLY TO LSW’S SUBSTITUTE SUPPLEMENTAL MEMORANDUM Case No. CV 10-9198 JVS (RNBx) 12 Case KASOWITZ, BENSON, TORRES & FRIEDMAN LLP 101 CALIFORNIA STREET, SUITE 2300 SAN FRANCISCO, CALIFORNIA 94114 10-cv-09198-JVS -RNB Document 348-1 Filed 10/05/12 Page 18o0f24 Page ID #:15331 Finally, LSW contends that is “unclear why Plaintiffs believe that an illustration that is expressly not of the policy applied for can serve as the basis for a claim of misrepresentation concerning the different policy that is applied for.” LSW’s Sub. Mem. at 11:25-26. LSW’s purported lack of clarity on this point is disingenuous. Plaintiffs pointed out in their motion papers and at oral argument that the language giving rise to all of their deception theories is contained in all illustrations, whether sales illustrations or batch illustrations, that are generated based on the default settings of LSW’s software. Pls. Op. Br. (Dkt. 226) at 2:5-9 & 5:21-6:8; Pls. Reply (Dkt. 250) at 5:14-6:2; Brockett Dec. (Dkt. 228) at J] 30-38; September 18, 2012 Tr. at 55:3-5. The fact that a sales illustration may differ from the policy as applied for, or from the policy issued, is irrelevant when all of the illustrations contain the misrepresentations and omissions for which Plaintiffs sue. This is illustrated in the case of Mr. Howlett, whose sales illustration was based on the assumption that his underwriting class was Elite Non Tobacco. Howlett Decl. (Dkt. 231) Ex. A. However, LSW’s underwriters changed his underwriting class to Standard Non Tobacco, and both his policy and his batch illustration were based on that underwriting class. Jd. Ex. B; [Proposed] SSDLD Ex. A. However, that change has no effect whatsoever on any of Plaintiffs’ theories of deception. '” IV. LSW MISCONSTRUES YOUNG V. NATIONWIDE MUTUAL INS. CO. LSW incorrectly argues that the Sixth Circuit’s recent decision in Young v. Nationwide Mut. Ins. Co., 2012 U.S. App. LEXIS 18625 (6th Cir. Sept. 5, 2012) does not apply where the defendant’s records are insufficient to identify class members. To the contrary, the Sixth Circuit in that case affirmed a ruling that the subclass “properly could be certified without the 100% accuracy Defendants " Likewise, Plaintiffs’ misrepresentations claims are unaffected by differences between Ms. Walker’s sales illustration and her batch illustration (e.g., amounts of planned premium and the existence of policy loans). [PROPOSED] PLAINTIFFS’ REPLY TO LSW’S SUBSTITUTE SUPPLEMENTAL MEMORANDUM Case No. CV 10-9198 JVS (RNBx) 13 Case 2110-cv-09198-JVS -RNB Document 348-1 Filed 10/05/12 Page 19o0f24 Page ID #:15332 KASOWITZ, BENSON, TORRES & FRIEDMAN LLP 101 CALIFORNIA STREET, SuITE 2300 SAN FRANCISCO, CALIFORNIA 94111 Gan assume to be requisite” and found “persuasive” the district court’s reasoning that to allow failures of record management “to defeat class certification would undermine the very purpose of class action remedies.” /d. at * 16."° LSW also does not attempt to dispute or distinguish the district court cases cited by Plaintiffs which, consistent with Young, certified class actions against insurance companies and rejected arguments that the incomplete nature of the companies’ files was a reason to deny certification. See, e.g., Chesner v. Stewart Title Guar. Co., 2008 U.S. Dist. LEXIS 19303, *35 (N.D. Oh. Jan. 23, 2008). In Chesner, as here, the defendant insurer argued that a review of its files would be “inconclusive” in identifying class members. In Chesner, as here, the defendant insurer argued that this “colossal endeavor” was a reason to deny certification on manageability grounds. In Chesner, the court granted certification and noted that “(manageability concerns have been rejected uniformly by courts confronting similar circumstances.” Jd. This Court should do the same here. Vv. ASIMPLE QUESTIONNAIRE CAN DETERMINE SUBCLASS MEMBERSHIP. LSW argues that a questionnaire cannot be used to determine membership in the class, but the numerous cases that Plaintiffs have cited demonstrate that such case management techniques are routine. Pls. Supp. Br. (Dkt. 339) at 8-10. LSW argues that using a questionnaire creates an impermissible opt-in class, but it either misconstrues or misunderstands the concept of an “opt in” class. An “opt in” class is one in which absent class members must take affirmative action to become a member of the class and be bound by the court’s decision in the relevant class action. Kern v. Siemens Corp., 393 F.3d 120, 123 (2d Cir. 2004). Plaintiffs are not '3 LSW falsely accuses Plaintiffs of a “misleading” citation to Shurland v. Bacci, 271 F.R.D. 139, 145 (N.D. Ill. 2010). Shurland is not based on destruction of records— though plaintiffs alleged that records were not retained, the Court held that, “/t/he absence of any impropriety aside, whether a class action is appropriate cannot be a function of [defendant’s] record-keeping practices. Jd. at 145-46. [PROPOSED] PLAINTIFFS’ REPLY TO LSW’S SUBSTITUTE SUPPLEMENTAL MEMORANDUM Case No. CV 10-9198 JVS (RNBx) 14 KASOWITZ, BENSON, TORRES & FRIEDMAN LLP 101 CALIFORNIA STREET, Suite 2300 SAN FRANCISCO, CALIFORNIA 94114 Case 10-cv-09198-JVS -RNB Document 348-1 Filed 10/05/12 Page 20 of 24 Page ID #:15333 suggesting an “opt-in” class; if the Court grants certification of the sales illustration subclasses, any individuals who received a sales illustration, if they do not opt out, automatically become members of the subclass and are bound by the Court’s judgment, regardless of whether they respond to the questionnaire. How to determine who is in the subclass is a separate matter. As noted by Plaintiffs at the hearing, a class member may sustain his burden of proving that he received an illustration through LSW’s documents and need not respond to the questionnaire, which underscores that the questionnaire does not create an opt-in class action. Ifa person who received a sales illustration does not opt-out, fails to respond to the questionnaire, and cannot sustain his burden to prove class membership by another method such as LSW’s documents, he is still bound by the judgment and could not sue LSW on an illustration-based claim. The authorities cited by LSW are in accord, as they reject attempts to limit class membership to persons who take steps to “opt-in.” See Kern, 393 F.3d at 123-127 (reversing certification of class defined as including the heirs and assigns “of all individuals who died in the fire who consent to inclusion," as the class definition “‘requires prospective members to take affirmative action’ by first consenting ‘to be bound by the judgment”); Andrews Farms v. Calcot, 258 F.R.D. 640, 656 (E.D. Cal. 2009). LSW is wrong to contend that the Court should not use questionnaires because class members might “misremember” whether they received a sales illustration, which is a document that LSW’s own executives have testified is uniquely “important” to prospective customers.’ Indeed, even the case cited by LSW, Jn re Phenylpropanolamine (PPA) Prod. Liab. Litig., 214 F.R.D. 614, 619 (W.D. Wash. 2003), accepted the possibility of using sworn affidavits, but held 4 Declaration of Patrick L. Brockett in Support of Motion for Class Certification (Dkt. 228) at 428. [PROPOSED] PLAINTIFFS’ REPLY TO LSW’S SUBSTITUTE SUPPLEMENTAL MEMORANDUM Case No. CV 10-9198 JVS (RNBx) 15 Case 2110-cv-09198-JVS -RNB Document 348-1 Filed 10/05/12 Page 21 of 24 Page ID #:15334 KASOWITZ, BENSON, TORRES & FRIEDMAN LLP 4101 CALIFORNIA STREET, SuiTE 2300 SAN FRANCISCO, CALIFORNIA 94111 that it was “unrealistic” under the unique circumstances of that case where the lawsuit concerned “minor purchases,” any purchase receipts would “not contain enough detail” to determine class membership, and membership turned on the presence of a specific ingredient that was frequently confused by consumers and contained in only certain formulations of products that “differed only slightly in name and packaging.” Jd. at 617-19. Unlike In re PPA, where six of the eight class representatives lacked documentary proof and three class representatives testified that they could not remember whether they purchased products containing the ingredient that defined class membership, see id. at 618-19, the named Plaintiffs here all possess documentary proof of use of a sales illustration and have presented clear and uncontroverted testimony that they received one prior to their application. LSW incorrectly contends that class members need to be asked about issues (e.g., One Policy Fee, '° loans, other disclosures’®) that do not determine subclass membership. LSW is not entitled to use the questionnaire as a fishing expedition to take absent class member discovery. Pls. Reply at 20 n.109. A questionnaire would simply inquire whether: (1) the policyholder received a sales illustration; (2) whether the policyholder received an Optional Report involving fees; and (3) whether the policyholder had any documentary evidence (e.g., sales illustrations) to submit.'’ These objective questions can assist in the resolution of class 'S Policyholders would not need to be asked about One Policy Fee because the defaults in LSW’s software produce those pages as part of the illustration, LSW prohibits agents from using incomplete illustrations, and LSW has provided no evidence that the default settings are ever reversed. '© The existence of unspecified “other disclosures” does not bear on class membership — individuals are members of the subclasses if they received a sales illustration. '7 LSW asserts without evidentiary support that “policyholders simply cannot be expected to remember” illustrations that they were shown on a computer, but it is unreasonable to assume that no policyholder could remember seeing an illustration, [PROPOSED] PLAINTIFFS’ REPLY TO LSW’S SUBSTITUTE SUPPLEMENTAL MEMORANDUM Case No. CV 10-9198 JVS (RNBx) 16 Case 2}10-cv-09198-JVS -RNB Document 348-1 Filed 10/05/12 Page 22 of 24 Page ID #:15335 KASOWITZ, BENSON, TORRES & FRIEDMAN LLP 4101 CALIFORNIA STREET, Suite 2300 SAN FRANCISCO, CALIFORNIA 94111 ae, membership where documentary proof is not present in LSW’s files. LSW’s contention that such procedural tools are unsuitable is contradicted by the litany of cases Plaintiffs have cited that employ questionnaires or affidavits to resolve more difficult evidentiary questions. VI. LSW IS INCORRECT THAT THE CLASS IS NOT ASCERTAINABLE. In contending that the subclass is not ascertainable, LSW appears to misunderstand the difference between being able to ascertain an identifiable class and it being administratively feasible for the Court to determine who is a member of the class. See, e.g., In re Methyl Tertiary Butyl Ether Prods. Liab. Litig., 209 F.R.D. 323, 336-37 & n.20 (S.D.N.Y. 2002). Here, there is no realistic dispute that Plaintiffs’ subclasses can be ascertained by reference to objective criteria: either an individual received a sales illustration, or he did not. Plaintiffs’ subclass definition provides notice that, if the subclasses are certified, anyone who received a sales illustration is subject to res judicata and will be bound. LSW’s argument that it is difficult to determine who received a sales illustration goes, at most, towards the implied requirement that it be administratively feasible to identify whether a particular individual is a member of the subclasses. But, as Plaintiffs noted in their supplemental submission, “the identity of class members need not be ascertained before class certification,” and questions about the manageability of doing so rarely should defeat certification. See, e.g., Boundas v. Abercrombie & Fitch Stores, Inc., 280 F.R.D. 408, 417 (N.D. Ill. 2012); Pls. Sub. Br. at 8. LSW also cites Wal-Mart Stores, Inc. v. Dukes, 131 S.Ct. 2541, 2561, 180 which is the only document provided to policyholders by LSW that shows how the policy operates. Nor is it reasonable to think that no policyholder could remember being shown the Optional Report on fees, which is the only information on how much the policy costs. [PROPOSED] PLAINTIFFS’ REPLY TO LSW’S SUBSTITUTE SUPPLEMENTAL MEMORANDUM Case No. CV 10-9198 JVS (RNBx) 17 KASOWITZ, BENSON, TORRES & FRIEDMAN LLP 4101 CALIFORNIA STREET, SUITE 2300 SAN FRANCISCO, CALIFORNIA 94111 Case '10-cv-09198-JVS -RNB Document 348-1 Filed 10/05/12 Page 23 of 24 Page ID #:15336 (2011), where the Supreme Court reaffirmed that Rule 23 cannot abridge, enlarge, or modify a substantive right. But, as numerous courts have noted, “the Supreme Court broke no new ground in this observation, and focused in its opinion only on the remarkable procedure proposed by the Ninth Circuit for considering the plaintiffs’ claims for backpay,” involving the replacement of individualized proof with “Trial by Formula.” Roderick v. XTO Energy, Inc., 281 F.R.D. 477, 487 (D. Kan. 2012); also Balasanyan v. Nordstrom, Inc., 2012 U.S. Dist. LEXIS 74777, *5 (S.D. Cal. May 30, 2012) (“the discussion in Dukes was in a much different context” involving the Ninth Circuit’s incorrect belief “that it was possible to replace such proceedings with Trial by Formula where a sample of class members | would be deposed, and the percentage of successful claims would then be applied to the class as a whole.”). Here, determinations of class membership would not abridge substantive rights because Plaintiffs propose a “very different” procedure from that trial by formula at issue in Dukes, and in this case each member would need to sustain their burden of proving subclass membership. F.g, In re Blood Reagents Antitrust Litig., 2012 U.S. Dist. LEXIS 118727, *71-72 n.16 (E.D. Pa. Aug. 22, 2012). LSW also cites to Stone v. Advance Am., Cash Advance Ctrs. Inc., 278 F.R.D. 562, 571 (S.D. Cal. 2011), but this case is inapposite. Stone involved a unique statute, the California Deferred Deposit Transaction Law (“CDDTL”), which states that “the notice of rights and the written agreement [provided in connection with payday loans] must be ‘in the language principally used by the customer.’” Jd. at 564. The court noted that there was no “published or even unpublished case involving a similar situation to the CDDTL,” where determination of class membership would depend on an individualized examination of each class members’ language skills, including their “unique ability to speak both Spanish and English, and that ability can range from perfect fluency, through a mix of ‘Spanglish,’ to none.” Jd. at 570-71. Unlike Stone, where [PROPOSED] PLAINTIFFS’ REPLY TO LSW’S SUBSTITUTE SUPPLEMENTAL MEMORANDUM Case No. CV 10-9198 JVS (RNBx) 18 Case 2]10-cv-09198-JVS -RNB Document 348-1 Filed 10/05/12 Page 24 of 24 Page ID #:15337 1|| affidavits were proposed to address an inherently individualized subjective 2|) interpretation of an individual’s “principal” language skills, here the questionnaire 3| would ask straightforward and objective questions regarding whether a subclass 4|| member received particular documents from LSw.'® 5 LSW concedes, sub silentio, that no Seventh Amendment issue is presented here, and that due process rights are routinely protected in summary procedures Wholesale Corp., 2012 U.S. Dist. LEXIS 137418, *172-78 (N.D. Cal. Sept. 25, 6 7|| concerning class membership. Pls. Supp. Br. at 11-13; see also Ellis v. Costco 8 9 2012). Though LSW’s : substitute supplemental brief presents issues that will have oa 10|| to be decided in order to to ‘détermine whether a particular policyHot der “