United States District Court, N.D. California
ORDER RE JOINT MOTION FOR APPROVAL OF NOTICE PLAN AND
AMEND CLASS DEFINITIONS DKT. NO. 189 (CASE NO.
14-CV-02346-JCS) DKT. NO. 174 (CASE NO.
C. SPERO Chief Magistrate Judge
September 19, 2016, the Court granted Plaintiffs' Motion
for Class Certification in these related cases,
certifying two classes in the Wit case and one in
Alexander. Subsequently, the Court denied Defendant
UBH's request to reconsider its order or to certify the
order for interlocutory review. On October 26, 2016, UBH
filed with the Ninth Circuit Court of Appeals a petition for
leave to appeal pursuant to Rule 23(f) of the Federal Rules
of Civil Procedure (“the Rule 23(f) Petition”).
The Ninth Circuit denied the Rule 23(f) Petition on March 2,
2017. Presently before the Court is the parties' Joint
Motion for Approval of Notice Plan and to Amend Class
Definitions (“Motion”). A hearing on the Motion
was held on February 3, 2017 at 9:30 a.m. and the parties
submitted supplemental briefs following the
parties have agreed to a Notice Plan that provides for notice
to be mailed to each class member. Motion at 2 & Ex. A
(Notice Plan). Under that plan, notices are to be mailed by
June 16, 2017 and the deadline to opt out is July 27, 2017
(40 days after the notices are mailed and one day before the
current dispositive motions date). The Notice Plan provides
that no new class members will be added after June 1, 2017
and the parties have stipulated to amend the class
definitions consistent with that limitation. Therefore, the
Court GRANTS the motion to amend the class definitions. The
parties disagree as to the form of notice, however.
See Motion Exs. B-D (Plaintiffs' proposed
notices) & Exs. E-G (UBH's proposed notices).
are three primary disputes. First, UBH has added the words
“was owed benefits” to Paragraph 2(a),
summarizing Plaintiffs' claims. See Motion, Exs.
H-J (redline versions of notices). Plaintiffs contend these
words improperly suggest that they must prove that each class
member was owed benefits. Conversely, UBH contends this
language accurately conveys the nature of Plaintiffs'
claims, which “require a showing that UBH's conduct
caused absent class members actual harm by denying them
benefits to which they were otherwise entitled.” Motion
at 6-7, 9.
Plaintiffs assert UBH's proposed notices are complicated
and confusing to the extent that they attempt to draw
“remedy-by-remedy” distinctions in Paragraph
2(a). Motion at 7. In addition, Plaintiffs assert, UBH
mistakenly states that the surcharge remedy is sought only as
to Claim One when in fact, it is sought as to both Claim One
and Claim Two. UBH argues that under Rule 23(b)(3), it is
important to “clarify” the remedies Plaintiffs
are seeking for each alleged wrong so that class members will
have enough information to make an informed decision as to
whether to opt out or remain in the class. Id. at
Plaintiffs object to language proposed by Defendants
addressing the practical and preclusive effects of both
remaining in the class and opting out. Plaintiffs
particularly object to proposed language at the end of
Paragraph 2(a) stating that if UBH is ordered to reprocess
Plaintiffs' denied claims it might also revisit
claims that were previously approved and reduce benefits on
those claims. Plaintiffs contend it is improper to give
notice of this possibility when it has not been addressed or
approved by the Court. Furthermore, they assert, the notice
is intended to inform class members of what remedies
Plaintiffs are seeking, not what Defendants are seeking.
Id. at 7. Defendants counter that due process
requires Plaintiffs be informed of this risk. Id. at
also object to the statement in Paragraph 6, proposed by
Defendants, that a class member who opts out will still be
bound by the outcome of the litigation to the extent the
Guidelines are changed. Motion at 7. According to Plaintiffs,
that statement is contrary to the law and will confuse class
members. Id. at 6-7. UBH, on the other hand,
contends it is undeniable that some of the injunctive and
declaratory relief sought on the Breach of Fiduciary Duty
Claim would apply to all class members regardless of whether
they opt out of the class; UBH argues class members should be
informed of this fact. Id. at 12-13.
incorrect, according to Plaintiffs, is language proposed by
Defendants informing class members that they may be precluded
from asserting other claims that are not being pursued by the
class, under the doctrine of res judicata. Id. at 8.
That statement is contrary to current law, Plaintiffs assert.
Id. at 8 n. 4 (citing Akootchook v. United
States, 271 F.3d 1160, 1165 n. 24 (9th Cir. 2001)). UBH
argues that the res judicata effect of participating
in this lawsuit may be broader than suggested in
Plaintiffs' proposed notice. Id. at 11 (citing
Brown v. Ticor Title Ins. Co., 982 F.2d 386, 390
(9th Cir. 1992)).
The Supplemental Briefs
February 3, 2017 hearing, the Court opined that some of the
disputes regarding the proposed notices turn on the specific
nature of the relief Plaintiffs intend to seek and the
related question of what claims or remedies, if any, class
members should be permitted to opt out of. The parties filed
supplemental briefs addressing these questions following the
Plaintiffs' supplemental briefs, they suggest that the
Court could drop the Rule 23(b)(3) certification because none
of the remedies they seek requires individualized inquiries
and all can be awarded under Rule 23(b)(1) and (2). Were the
Court to decertify the classes under Rule 23(b)(3), notice
could be dispenses with altogether, they contend. In the
alternative, Plaintiffs propose that to the extent the Court
finds that the surcharge and reprocessing remedies are forms
of relief that may be awarded only under Rule 23(b)(3), class
members should be permitted to opt out of the action
altogether ˗ an approach they contend will be more
easily understood by class members than permitting them to
opt out of specific remedies. Plaintiffs agree with UBH,
however, that any declaratory judgment and prospective
injunctive relief will apply to all future claims, regardless
of whether or not an individual opted out of the Wit
or Alexander classes.
reject Plaintiffs' assertion that the surcharge and
reprocessing remedies can be awarded under Rule 23(b)(1) or
(2), arguing that both require individualized inquiries and
that class members must be given an opportunity to opt out of
them. They agree with Plaintiffs that the declaratory relief
they seek, and any prospective injunctive relief awarded,
will be binding on all class members regardless of whether or
not they opt out.
to Rule 23, “[f]or any class certified under Rule
23(b)(1) or (b)(2), the court may direct appropriate
notice to the class.” Fed.R.Civ.P. 23(c)(2)(A). In
addition, where a class has been certified under Rule
23(b)(3), “the court must direct to class
members the best notice that is practicable under the
circumstances, including individual notice to all members who
can be identified through reasonable effort.”
Fed.R.Civ.P. 23(c)(2)(B) (emphasis added). The ...