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In Re: National Western Life Insurance Deferred Annuities Litigation

February 14, 2013


The opinion of the court was delivered by: Hon. Gonzalo P. Curiel United States District Judge


This Document Relates To: All Actions


Pending before the Court is defendant National Western Life Insurance Company's ("National Western") Motion to Decertify the Class. (ECF No. 387.) Plaintiffs have filed an opposition to National Western's Motion, (ECF No. 390), and National Western has filed a reply, (ECF No. 393). After considering the record in this matter and the parties' submissions, and for the reasons set forth below, the Court DENIES National Western's Motion to Decertify the Class.


The relevant facts in this case having been included in several prior orders, the Court will not reiterate them in depth here. In short, this is a consolidated class action lawsuit on behalf of all persons age sixty-five and older who purchased certain deferred annuity investment products from National Western. Plaintiffs claim National Western provided Plaintiffs with sales materials that falsely and deceptively represented they would receive a premium bonus, added to their investment account values, and that the investors would not be charged any sales charges or fees. Plaintiffs claim that, in truth, the premium bonus was illusory because National Western would recoup the bonus, or a portion thereof, by crediting the annuities with less interest than if the annuities did not have a bonus. Plaintiffs additionally claim the annuities do impose a sales charge by way of sales commissions paid to agents. National Western claims Plaintiffs received a valuable product that is exactly what they were told it is, so they have not been damaged in any way.

Prior to this case's transfer to this Court, Judge Sammartino certified a national RICO class and a California class. (ECF No. 206.) In certifying the national class, Judge Sammartino concluded, for purposes of analyzing the predominance requirement under Rule 23(b)(3), that common questions of causation predominated over individual ones. With regard to causation, Judge Sammartino first noted that "Plaintiffs have established causation by showing reliance on the alleged misrepresentations." Judge Sammartino stated: "Finding that reliance is a common question in this case is logical," concluding "[c]onsumers are nearly certain to rely on prominent (and prominently marketed) features of a product which they purchase." Then, citing the proposition that "by definition, parties to a contract are aware of and rely on the representations and omissions in the contract," Judge Sammartino concluded such an inference could be made in this case on a class-wide basis even though the alleged misrepresentations were not actually part of that contract but were included in "written materials about the contract" that Plaintiffs were required to read and understand.

In support of her conclusion, Judge Sammartino cited Negrete v. Allianz Life Insurance Company of North America ("Negrete I"), 238 F.R.D. 482, 491 (C.D. Cal. 2006), which provides that "evidence of standardized written presentations, coupled with plaintiffs' allegations that class members purchased annuity products far less valuable than other comparable products or the prices paid for them, adequately establishes proximate causation." Judge Sammartino also cited Garner v. Healy, 184 F.R.D. 598 (N.D. Ill. 1999), and Peterson v. H & R. Block Tax Services, Inc., 174 F.R.D. 78 (N.D. Ill. 1997), which, according to Judge Sammartino, "held that classwide reliance was obvious where no other logical explanation would support the class members' behavior." Judge Sammartino lastly cited Poulos v. Caesars World, Inc., 379 F.3d 654, 664-66 (9th Cir.2004), for the proposition that "reliance can be shown where it provides the 'common sense' or 'logical explanation' for the behavior of plaintiffs and the members of the class."

Judge Sammartino also concluded that damages "should be readily provable class-wide." In so doing, Judge Sammartino relied on evidence submitted by Plaintiffs demonstrating that "funds used to compensate sales people . . . reduce investment value dollar for dollar" and evidence demonstrating that "the 'premium bonus' may produce no additional realizable value to a policyholder in the way of the market value of the Deferred Annuity." Judge Sammartino further found that Plaintiffs' evidence on damages is "directly related to the alleged misrepresentations upon which the Plaintiffs claims to have relied," thus concluding that "causation is susceptible to class treatment because it is a common question."

In reaching her decision, Judge Sammartino rejected National Western's argument that none of the named plaintiffs "relied on the so-called omissions relating to commissions or bonuses." Judge Sammartino concluded that any ambiguity in the named plaintiffs' deposition testimony was overcome by their subsequent declarations and by their attestations that they read and understood the written materials containing the alleged misrepresentations that National Western provided to them at the time of purchase. Accordingly, Judge Sammartino could not "find that none of the Named Plaintiffs relied on the alleged misrepresentations."


National Western seeks to decertify the national class based on what it asserts are "significant developments in the relevant and law and in the evidence in this case" that have occurred since Judge Sammartino certified the national RICO class. National Western asserts those "significant developments" include the Supreme Court's decision in Wal-Mart Stores, Inc. v. Dukes, 131 S. Ct. 2541 (2011), and the taking of fifteen randomly selected class member depositions, which National Western asserts "demonstrate that reliance and causation cannot be established by common proof."

I. Legal Standard

"An order that grants or denies class certification may be altered or amended before final judgment." Fed. R. Civ. P. 23(c)(1)(C); Rodriguez v. West Publ'g Corp., 563 F.3d 948, 966 (9th Cir.2009) ("A district court may decertify a class at any time."). In deciding whether to decertify a class, a court may consider "subsequent developments in the litigation." Gen. Tel. Co. of S.W. v. Falcon, 457 U.S. 147, 160 (1982). "In considering the appropriateness of decertification, the standard of review is the same as a motion for ...

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