United States District Court, C.D. California
ROSS KLEIN; KLEIN METALS, INC.; and KLEIN ENTERPRISES, INC., Plaintiffs,
MONY LIFE INSURANCE COMPANY OF AMERICA, Defendant.
ORDER RE: DEFENDANT'S MOTION TO DISMISS SECOND
AMENDED COMPLAINT PURSUANT TO F.R.C.P. 12(B)(6) ;
DEFENDANT'S MOTION TO STRIKE AND DISMISS PLAINTIFFS'
REQUESTS FOR ATTORNEYS' FEES AND PUNITIVE DAMAGES FROM
THE SECOND AMENDED COMPLAINT 
S.W. Lew, Senior U.S. District Judge
before the Court is Defendant MONY Life Insurance Company of
America's (“Defendant”) Motion to Dismiss
Pursuant to Federal Rule of Civil Procedure 12(b)(6)
(“Motion to Dismiss”)  and Motion to Strike
and Dismiss Requests for Attorneys' Fees and Punitive
Damages from the Second Amended Complaint (“Motion to
Strike”) . Having reviewed all papers submitted
pertaining to these Motions, the Court NOW FINDS AND
RULES AS FOLLOWS: the Court GRANTS
Defendant's Motion to Dismiss WITHOUT LEAVE TO
AMEND and DENIES as MOOT
Defendant's Motion to Strike.
2004, Plaintiffs Ross Klein; Klein Metals, Inc.; and Klein
Enterprises, Inc. (collectively, “Plaintiffs”)
sought advice from Defendant's purported agent, Kathleen
Novotny (“Novotny”). Second Am. Compl.
(“SAC”) ¶ 16, ECF No. 44. According to the
Second Amended Complaint (“SAC”), Novotny
wrongfully advised Plaintiffs to invest in a Section 419
plan, called the PREPare Plan (the “Plan”),
through which Defendant sold its insurance products.
Id. ¶¶ 14-15. The Internal Revenue Service
(“IRS”) had issued a notice in 1995 stating that
such plans violated the Internal Revenue Code, and 2004
Treasury Regulations confirmed this prohibition because
individualized accounting within a plan-like Defendant did
with the Plan here-is considered a tax shelter. Id.
¶ 12. Nevertheless, Novotny prepared marketing materials
promising that: (1) employers, such as Plaintiffs, may deduct
contributions to the Plan; (2) Plaintiffs would receive tax
savings for their first-year contributions; and (3) in each
following year, Plaintiffs' after-tax cost would be
reduced. Id. ¶¶ 18, 20, Ex. A.
contributed to the Plan until 2010, in reliance upon
Novotny's alleged misrepresentations that the Plan was
tax deductible and IRS-compliant. Id. ¶¶
27, 32. Meanwhile, neither Novotny nor Defendant informed
Plaintiffs that Defendant had a policy against selling its
insurance products in such plans. Id. ¶¶
28, 30-31. Eventually, the IRS audited Plaintiff Ross Klein
and assessed significant back taxes, interest, and penalties.
Id. ¶¶ 33-34. Specifically, the IRS took
issue with Defendant's individualized accounting.
Id. ¶ 34. Defendant's representatives
admitted in depositions to Defendant's use of separate
accounting for each employer within the Plan. Id.
¶ 24. Plaintiffs claim they discovered this practice
after the depositions became public record in 2015.
Id. ¶ 35.
September 22, 2017, Plaintiffs filed their Complaint 
against Defendant. Thereafter, on November 8, 2017,
Plaintiffs filed their First Amended Complaint
(“FAC”) . The Court dismissed the FAC with
leave to amend  on February 27, 2018, warning Plaintiffs
of the possibility of dismissal with prejudice for a
subsequent, deficient pleading.
March 19, 2018, Plaintiffs filed their SAC . Defendant
filed the instant Motion to Dismiss  and Motion to Strike
 on April 2, 2018. Plaintiffs timely opposed [49, 51],
and Defendant timely replied [53, 54].
Rule of Civil Procedure 12(b)(6) allows a party to move for
dismissal of one or more claims if the pleading fails to
state a claim upon which relief can be granted. A complaint
must contain sufficient facts, accepted as true, to state a
plausible claim for relief. Ashcroft v. Iqbal, 556
U.S. 662, 678 (2009) (quotation omitted). Dismissal is
warranted for a “lack of a cognizable legal theory or
the absence of sufficient facts alleged under a cognizable
legal theory.” Balistreri v. Pacifica Police
Dep't, 901 F.2d 696, 699 (9th Cir. 1988) (citation
ruling on a 12(b)(6) motion, a court may generally consider
only allegations contained in the pleadings, exhibits
attached to the complaint, and matters properly subject to
judicial notice.” Swartz v. KPMG LLP, 476 F.3d
756, 763 (9th Cir. 2007) (citation omitted). A court must
presume all factual allegations to be true and draw all
reasonable inferences in favor of the non-moving party.
Klarfeld v. United States, 944 F.2d 583, 585 (9th
Cir. 1991). The question is not whether the plaintiff will
ultimately prevail, but whether the plaintiff is entitled to
present evidence to support the claims. Jackson v.
Birmingham Bd. of Educ., 544 U.S. 167, 184 (2005)
(quoting Scheuer v. Rhodes, 416 U.S. 232, 236
(1974)). While a complaint need not contain detailed factual
allegations, a plaintiff must provide more than “labels
and conclusions” or “a formulaic recitation of
the elements of a cause of action.” Bell Atl. Corp.
v. Twombly, 550 U.S. 544, 555 (2007).