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In re National Western Life Insurance Annuities Litigation

July 12, 2010

IN RE NATIONAL WESTERN LIFE INSURANCE ANNUITIES LITIGATION


The opinion of the court was delivered by: Honorable Janis L. Sammartino United States District Judge

ORDER: GRANTING DEFERRED PLAINTIFFS' RENEWED MOTION FOR CLASS CERTIFICATION (Doc. No. 177)

Presently before the Court is Plaintiffs' renewed motion for class certification. (Doc. No. 192.) Also before the Court are Defendant's opposition (Doc. No. 187) and Plaintiffs' reply. (Doc. No. 195.) For the reasons stated, the Court GRANTS IN PART AND DENIES IN PART Plaintiffs' motion.

BACKGROUND

The Court discussed the facts of this case in its Order denying Plaintiffs' first motion for class certification. (Doc. No. 176 (Prior Order) at 2.) Those facts remain materially unchanged and are incorporated by reference here. Of note, however, "plaintiffs Peter and Mary Glenane are no longer seeking to represent the proposed Classes" and "will continue to litigate their claims on an individual basis." (Memo. ISO Motion at 1 n.1.)

LEGAL STANDARD

Federal Rule of Civil Procedure 23 governs motions for class certification. Under Rule 23, "[t]he party seeking certification bears the burden of showing that each of the four requirements of Rule 23(a) and at least one requirement of Rule 23(b) have been met." Dukes v. Wal-Mart Stores, Inc., 603 F.3d 571, 580 (9th Cir. 2010) (quoting Zinser v. Accufix Research Inst., Inc., 253 F.3d 1180, 1186 (9th Cir.), amended by 273 F.3d 1266 (9th Cir.2001)); see also Doninger v. Pac. Nw. Bell, Inc., 564 F.2d 1304, 1308 (9th Cir. 1977); W. States Wholesale, Inc. v. Synthetic Indus., Inc., 206 F.R.D. 271, 274 (C.D. Cal. 2002). "[W]hether the plaintiff or plaintiffs have stated a cause of action or will prevail on the merits," is not relevant to this inquiry. Eisen v Carlisle & Jacquelin, 417 US 156, 178 (1974) (quoting Miller v Mackey Int'l., 452 F 2d 424 (5th Cir. 1971)) (internal quotation marks omitted).

Rule 23(a) provides four requirements that must be met in any class action: (1) the class is so numerous that joinder of all members is impracticable; (2) there are questions of law or fact common to the class; (3) the claims or defenses of the representative parties are typical of the claims or defenses of the class; and (4) the representative parties will fairly and adequately protect the interests of the class. Fed. R. Civ. P. 23(a). As to Rule 23(b), the plaintiff need only show that any one of the three described scenarios is satisfied. Fed. R. Civ. P. 23(b).

On a motion for class certification, the Court "is bound to take the substantive allegations of the complaint as true." Blackie v Barrack, 524 F.2d 891, 901 n.17 (9th Cir 1975). However, the Court is "explicitly requir[ed] . . . to probe behind the pleadings if doing so is necessary to make findings on the Rule 23 certification decision." Dukes, 603 F.3d at 589. In doing so, it may not "conduct a preliminary inquiry into the merits of [the] suit in order to determine whether it may be maintained as a class action." Eisen, 417 U.S. at 177. Nonetheless, the Court may "consider evidence which goes to the requirements of Rule 23 even though the evidence may also relate to the underlying merits of the case." Hanon v Dataproducts Corp., 976 F 2d 497, 509 (9th Cir 1992); see also Dukes, 603 F.3d at 586--87. In considering this evidence, the Court must "avoid either party bootstrapping a trial or summary judgment motion into the certification stage." Dukes, 603 F.3d at 591; see also Blades v. Monsanto Co., 400 F.3d 562, 567 (8th Cir. 2005) ("The closer any dispute at the class certification stage comes to the heart of the claim, the more cautious the court should be in ensuring that it must be resolved in order to determine the nature of the evidence the plaintiff would require." (citing Eisen, 417 U.S. at 177--78)).

"Rule 23 'provides district courts with broad discretion to determine whether a class should be certified, and to revisit that certification throughout the legal proceedings before the court.' If evidence not available at the time of certification disproves Plaintiffs' contentions that common issues predominate, the district court has the authority to modify or even decertify the class, or use a variety of management devices to address the individualized issues that have arisen." Dukes, 603 F.3d at 579 (citations omitted).

ANALYSIS

I. CLASS DEFINITIONS

During the development of class certification law, courts have read a requirement of adequate class definitions into Rule 23. They demand that the proposed definition identify "a distinct group of plaintiffs whose members [can] be identified with particularity." Lerwill v. In-flight Motion Pictures, Inc., 582 F.2d 507, 512 (9th Cir. 1978). Thus, the class definition must supply "objective criteria" by which membership may be "presently ascertain[ed]," such as "a defendant's own actions and the damages caused by such actions, or even just geographical boundaries." Campbell v. PricewaterhouseCoopers, LLP, 253 F.R.D. 586, 593 (E.D. Cal. 2008). Which is not to say that the Court must be able to identify "every potential member . . . at the commencement of the action. As long as 'the general outlines of the membership of the class are determinable at the outset of the litigation, a class will be deemed to exist.'" O'Connor v. Boeing N. Am., Inc., 184 F.R.D. 311, 319 (C.D. Cal. 1998) (internal citations omitted). The primary goal of this inquiry "is to make it 'administratively feasible' for the court to determine individual class membership." Campbell, 253 F.R.D. at 593(citing Aiken v. Obledo, 442 F. Supp. 628, 658 (E.D. Cal. 1977)).

Plaintiffs "seek certification of both a nationwide [Racketeer Influenced and Corrupt Organizations Act (RICO)] class and a California statewide class." (Memo. ISO Motion at 1.) They also state that their claims relate to only "four National Western deferred annuities: Confidence Flex 45, Confidence Flex 85, Future Assurance, and Benefit Assurance." (Id. (footnote omitted).)

However, Plaintiffs do not provide exact class definitions in their motion.

Nonetheless, certain further statements narrowing the classes may be gleaned from the Complaint. For example, Plaintiffs apparently intend to limit these classes to "senior citizens (persons age 65 and older) who within the applicable statute of limitations of the date of the commencement of this action, purchased one or more National Western Life Insurance Company deferred annuities either directly, or through the surrender (in whole or part) of an existing permanent life insurance policy or annuity, or by borrowing against an existing permanent life insurance policy." (Doc. No. 54 (CAC) ¶ 136.) They also would exclude "defendants and their directors, officers, predecessors, successors, affiliates, agents, co-conspirator and employees, as well as the immediate family members of such persons." (Id. ¶ 137.)

Thus, the Court construes Plaintiff's proposed classes as follows:

* Nationwide Class: Any senior citizen, excluding defendants and their directors, officers, predecessors, successors, affiliates, agents, co-conspirator and employees, as well as the immediate family members of such persons, who within the applicable statute of limitations of the date of the commencement of this action, purchased one or more of the relevant National Western Life Insurance Company deferred annuities either directly, or through the surrender (in whole or part) of an existing permanent life insurance policy or annuity, or by borrowing against an existing permanent life insurance policy.

* California Class: Any California senior citizen, excluding defendants and their directors, officers, predecessors, successors, affiliates, agents, co-conspirator and employees, as well as the immediate family members of such persons, who within the applicable statute of limitations of the date of the commencement of this action, purchased one or more of the relevant National Western Life Insurance Company deferred annuities either directly, or through the surrender (in whole or part) of an existing permanent life insurance policy or annuity, or by borrowing against an existing permanent life insurance policy.

Given that the parties should be able to determine who is and who is not in the classes based on Defendant's records, the Court finds that these definitions adequately describe the proposed classes.

II. RULE 23(A)'S REQUIREMENTS

Although Plaintiffs set forth their case under Rule 23(a), Defendant largely ignores these class certification requirements. Nonetheless, the Court has an independent duty to "make determinations that each requirement of Rule 23 is actually met." Dukes, 603 F.3d at 587. After conducting that inquiry, the Court finds that Plaintiffs have satisfied the Rule 23(a) class certification prerequisites.

A. Numerosity

Rule 23(a)(1) requires that "the class [be] so numerous that joinder of all members is impracticable." "The numerosity requirement requires examination of the specific facts of each case and imposes no absolute limitations." Gen. Tel. Co. of the Nw., Inc. v. EEOC, 446 U.S. 318, 330 (1980). Courts have found joinder impracticable in cases involving as few as forty class members. Consolidated Rail Corp. v. Town of Hyde Park, 47 F.3d 473, 482 (2d Cir. 1995) (stating that numerosity is "presumed at a level of 40 members"); Ikonen v. Hartz Mountain Corp., 122 F.R.D. 258, 262 (S.D. Cal. 1988) ("As a general rule, classes of 20 are too small, classes of 20--40 may or may not be big enough depending on the circumstances of each case, and classes of 40 or more are numerous enough.").

Plaintiffs assert that "National Western's electronic business records establish that the nationwide RICO class encompasses more than 16,000 annuity policies." (Memo. ISO Motion at 11.) Joinder of this many plaintiffs would clearly be impracticable for purposes of this litigation.

Similarly, Plaintiffs claim that "[t]he proposed California Class encompasses nearly 2,500 annuity policies." (Id.) Again, complete joinder would be impracticable. As such, the Court ...


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