UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA

Transcription

1 Case :0-cv-0-DMS-MDD Document Filed 0/0/ Page of UNITED STATES DISTRICT COURT SOUTHERN DISTRICT OF CALIFORNIA 0 GEOFFREY MOYLE, et al., vs. LIBERTY MUTUAL RETIREMENT BENEFIT PLAN, et al., Plaintiffs, CASE NO. 0cv DMS (BLM) ORDER GRANTING PLAINTIFFS MOTION FOR CLASS CERTIFICATION 0 Defendants. In this action for alleged violations of the Employees Retirement Income Security Act ( ERISA ), Plaintiffs filed a motion for class certification under Federal Rule of Civil Procedure. Defendants filed an opposition and Plaintiffs replied. Matthew B. Butler and Andrew Myers appeared at oral argument on behalf of Plaintiffs. Ashley B. Abel and Jennifer L. Santa Maria appeared on behalf of Defendants. After oral argument, the parties filed supplemental briefs addressing issues as directed by the Court. For the reasons which follow, Plaintiffs motion is granted. Factual and Procedural Background Plaintiffs Geoffrey Moyle, Pauline Arwood, Thomas Rollason and Jeannie Sanders are four former employees of Golden Eagle Insurance Company ("Old Golden Eagle"). On or about October,, Liberty Mutual Insurance Company ("LMIC") purchased Old Golden Eagle from a conservatorship of the California Insurance Commissioner and established the Golden Eagle Insurance Corporation as a subsidiary of LMIC. Plaintiffs claim LMIC and/or Liberty Mutual Group, Inc. ("LMGI," collectively, "Liberty Mutual") sought to retain Old Golden Eagle employees and advised - - 0cv

2 Case :0-cv-0-DMS-MDD Document Filed 0/0/ Page of 0 them that if they remained in their positions, they would be eligible to participate in the Liberty Mutual Retirement Benefit Plan ("Plan") with credit for their years of service with Old Golden Eagle in addition to their continued time of employment after the acquisition. While Defendants expressly stated that Old Golden Eagle employees would receive prior service credit for the years of service with Old Golden Eagle under the Plan for purposes of eligibility and vesting, they did not expressly state one way or another whether Old Golden Eagle employees would be credited for purposes of calculating pension benefit accrual under the Plan as well. Plaintiffs remained in their positions after the acquisition and later retired. Upon retirement, their pension benefits were calculated based only on their years of service after the acquisition. For example, Mr. Moyle was hired by Old Golden Eagle in April, but received credit for only. years of service, reflecting only his employment after the acquisition. It is undisputed that years of service with Old Golden Eagle were credited under the Plan for purposes of eligibility and vesting. However, Plaintiffs and many other Old Golden Eagle employees expected to receive credit also for purposes of calculating their accrued retirement benefit. This unfulfilled expectation forms the basis of this action. After exhausting administrative remedies, Plaintiffs filed an action in this Court for ERISA violations. In the operative Second Amended Complaint Plaintiffs claim, based on various legal theories, that years of service with Old Golden Eagle should be included in the calculation of accrued benefits. They allege three causes of action for which they seek class certification. 0 In their first cause of action, Plaintiffs request payment of benefits under the Plan pursuant to U.S.C. Section (a)()(b), which provides that a plan participant may bring a civil action to recover benefits due him under the terms of the plan, to enforce his rights under the terms of the plan, or to clarify his rights to future benefits under the terms of the plan. Plaintiffs claim that the Plan provides, or that it should be interpreted to provide, for calculation of benefits which includes years of service with Old Golden Eagle. (Second Am. Compl. ( Compl. ) at -.) In the fourth cause of action Plaintiffs allege violations of U.S.C. Section 0(a) and its related regulations, C.F.R. 0.0-(l) & 0.0-(a), against the Liberty Mutual This order is based on Plaintiffs claims as framed in the Second Amended Complaint. To the extent Defendants arguments are based on Plaintiffs claims as they were framed in the prior versions of the complaint or in the administrative proceedings, they are rejected cv

3 Case :0-cv-0-DMS-MDD Document Filed 0/0/ Page of 0 0 Retirement Benefit Plan Retirement Board ("LMRBP") on the theory that the summary plan descriptions ("SPD") did not appropriately disclose the fact that although prior years of service with Old Golden Eagle would be included for purposes of eligibility and vesting, they would not be included in the calculation of the pension benefit. In the second cause of action Plaintiffs request equitable relief under U.S.C. Section (a)(), which provides for civil actions (A) to enjoin any act or practice which violates any provisions of [the ERISA subchapter titled Protection of Employee Benefit Rights ] or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any [provisions of the subchapter] or the terms of the plan. In their supplemental briefing, Plaintiffs specify their request for equitable relief is based on the alleged breach of Defendants fiduciary duties and violations alleged in the second cause of action. Plaintiffs request the Court to require Defendants to include the years of service with Old Golden Eagle in the benefit calculation and pay pension benefits accordingly. To the extent Plaintiffs' opening brief suggests that a class should also be certified with respect to their third cause of action for violation of C.F.R. Section 0.0-(h)()(i) against the LMRBP, such suggestion is expressly disclaimed in the complaint, which states that this claim is brought "on behalf of the individual claimants only and is not brought as a class action." (Cf. Compl. at & Pls' Mem. of P.&A. at (item C).) Accordingly, the third cause of action is not considered for class certification. Plaintiffs seek to certify a mandatory, non-opt out class consisting of all former Old Golden Eagle employees who are current or former Liberty Mutual employees from October,, who participated or are participating in the Plan and were denied or will be denied credit for all years of service with Old Golden Eagle for the purposes of calculating all benefits owed to them under the Plan from October, to the present. (Pls' Mem. of P.&A. at.) Discussion "The class action is an exception to the usual rule that litigation is conducted by and on behalf of the individual named parties only.'" Wal-Mart Stores, Inc. v. Dukes, U.S., S.Ct., 0 (0) (citing Califano v. Yamasaki, U.S., 00-0 ()). In this regard, Rule - - 0cv

4 Case :0-cv-0-DMS-MDD Document Filed 0/0/ Page of 0 0 contains two sets of class certification requirements set forth in Rule (a) and (b). United Steel, Paper & Forestry, Rubber, Mfg. Energy, Allied Indus. & Serv. Workers Int'l Union v. ConocoPhillips Co., F.d 0, 0 (th Cir. 00) ("United Steel"). "The party seeking class certification bears the burden of demonstrating that the[se] requirements... are met." Id. at 0. The district court must conduct a rigorous analysis to determine whether the prerequisites of Rule have been met. Gen. Tel. Co. v. Falcon, U.S., (). It is a well-recognized precept that "the class determination generally involves considerations that are enmeshed in the factual and legal issues comprising the plaintiff's cause of action."' Coopers & Lybrand v. Livesay, U.S., () (quoting Mercantile Nat'l Bank v. Langdeau, U.S., ()). However, "[a]lthough some inquiry into the substance of a case may be necessary to ascertain satisfaction of the commonality and typicality requirements of Rule (a), it is improper to advance a decision on the merits at the class certification stage." Moore v. Hughes Helicopters, Inc., 0 F.d, 0 (th Cir. ) (citation omitted). Rather, the court's review of the merits should be limited to those aspects relevant to making the certification decision on an informed basis. See Fed. R. Civ. P. Advisory Committee Notes. If a court is not fully satisfied that the requirements of Rules (a) and (b) have been met, certification should be denied. Falcon, U.S. at. Rule (a) Requirements "Rule (a) ensures that the named plaintiffs are appropriate representatives of the class whose claims they wish to litigate. The Rule's four requirements numerosity, commonality, typicality, and adequate representation effectively limit the class claims to those fairly encompassed by the named plaintiff's claims." Dukes, S.Ct. at 0- (internal quotation marks and citations omitted). Numerosity Rule (a)() requires the class to be "so numerous that joinder of all members is impracticable." Fed. R. Civ. P. (a)(); Staton v. Boeing Co., F.d, (th Cir. 00). The plaintiff need not state the exact number of potential class members; nor is a specific minimum At oral argument and in their response to Plaintiffs supplemental brief, Defendants argued at length why Plaintiffs cannot succeed on the merits under the circumstances of this case. These arguments are largely irrelevant to class certification, and thus are not considered. Defendants may raise them in a later motion addressing the merits of Plaintiffs claims cv

5 Case :0-cv-0-DMS-MDD Document Filed 0/0/ Page of 0 0 number required. Arnold v. United Artists Theatre Circuit, Inc., F.R.D., (N.D. Cal. ). Rather, whether joinder is impracticable depends on the facts and circumstances of each case. ld. Plaintiffs maintain there are, putative class members. Defendants do not dispute this is the number of Plan participants who fit Plaintiffs definition of the class. They argue, however, that Plaintiffs meet the typicality and commonality requirements, if at all, only as to a much smaller number of Plan participants. These arguments are better addressed below in the context of commonality and typicality requirements of Rule (a). It is undisputed that a class of, members meets the numerosity requirement. Commonality The second element of Rule (a) requires the existence of "questions of law or fact common to the class." Fed. R. Civ. P. (a)(). This requirement is met through the existence of a "common contention" that is of "such a nature that it is capable of classwide resolution[.]" Dukes, S.Ct. at. What matters to class certification... is not the raising of common questions even in droves but, rather the capacity of a classwide proceeding to generate common answers apt to drive the resolution of the litigation. Dissimilarities within the proposed class are what have the potential to impede the generation of common answers. ld. (internal quotation marks and citation omitted). Plaintiffs argue the case is suitable for class action treatment because Defendants' representations and omissions regarding Plan benefits for former Old Golden Eagle employees were uniform. Defendants disagree. They contend Plaintiffs received pertinent information about Plan benefits from a "mix of sources," which were individual to each class member, and that detrimental reliance, materiality and other factors can only be proven on an individual basis, thus precluding class certification. For the reasons discussed below, the following questions of law and fact are suitable for resolution on a class-wide basis: () whether, under the terms of the Plan, former Old Golden Eagle To the extent Defendants claim their disclosures complied with ERISA, that issue goes to the merits of Plaintiffs claims, and is not appropriate for decision at this time. See Moore, 0 F.d at cv

6 Case :0-cv-0-DMS-MDD Document Filed 0/0/ Page of 0 0 employees are entitled to calculation of retirement benefits which includes years of service with Old Golden Eagle; () whether the SPDs distributed to Old Golden Eagle employees complied with U.S.C. Section 0(a); and () whether Defendants, in light of their representation that Old Golden Eagle employees would receive prior service credit for their years of service with Old Golden Eagle for purposes of eligibility and vesting, had a duty under ERISA to affirmatively disclose that the credit would not apply for purposes of calculating the accrued retirement benefit. Accordingly, Plaintiffs have met the commonality requirement of Rule (a). Other issues, which are necessarily included in these questions, also appear to be suitable for class-wide resolution, as discussed below. Uniformity of Omissions and Representations Plaintiffs maintain Defendants' disclosures to Old Golden Eagle employees regarding Plan benefits were the same for all putative class members. Plaintiffs rely first on the August, letter from Karl L. Rubinstein, Deputy Conservator and Chief Executive Officer of Old Golden Eagle, to Old Golden Eagle employees stating that "prior years of service at Golden Eagle will be considered for purposes of benefits eligibility and vesting." (Decl. of Matthew B. Butler in Supp. of Pls Mot. for Class Certification ( Butler Decl. ), Ex. at -.) Plaintiffs also point to evidence showing that in August and September, Liberty Mutual held enrollment meetings to provide Old Golden Eagle employees with information about posttransition employee benefits, and that the information presented to all Golden Eagle employees was the same. The purpose of the meetings was to provide Old Golden Eagle employees with all the important information about employee benefits, including the Plan. (Decl. of Matthew B. Butler in Supp. Pls. Reply Ex. (Depo. of John St. Martin ( St. Martin Depo. ) at -); see also Butler Decl. Exs. (Depo. of Suzanne Cortez ( Cortez Depo.) at -) & 0 (Depo. of Virginia Bennett ( Bennett Depo. ) at -0).) All employees attended at least one of these meetings. (Cortez Depo. at 0, 0.) The meetings were conducted according to a Facilitator Guide prepared by Liberty Mutual as a script for the presenters. (Butler Decl. Exs. (decl. of Jonathan Leamon ( Leamon Decl. ) & (Depo. of Laura Bond ( Bond Depo. ) at -0, & ).) The Facilitator Guide covered the Plan benefits by stating that "[t]he benefit depends on years of service with the Company and pay" and that "Golden Eagle employees will be credited with service at Golden Eagle for purposes - - 0cv

7 Case :0-cv-0-DMS-MDD Document Filed 0/0/ Page of 0 0 of determining eligibility to join the Plan, as well as for determining eligibility for early retirement benefits and vesting." (Butler Decl. Ex. at III- & III-.) Neither the Plan and the SPDs distributed to the Plan participants expressly addressed accrual of benefits in relation to Old Golden Eagle employees. (Mem. of P.&A. at.) After the transition Defendants distributed booklets titled Your Personal Benefits Statement, which listed the employee s hire date as the date they were hired by Old Golden Eagle and past service credit which included the years of employment with Old Golden Eagle. (See Mem. of P.&A. at - & ; Compl. at ; Decl. of Ashley B. Abel in Supp. of Defs Opp n to Pls Mot. for Class Certification ( Abel Decl. ) Ex. (Depo. of Geoffrey Moyle Moyle Depo. ) at 0); & Butler Decl. Ex. (Decl. of Suzanne Caudle).) Defendants mostly do not dispute the above. (See Rep. s Tr. of Proceedings, Mot. Hr g. ( Tr. ) at -.) They argue that different representations were made at different enrollment meetings, and that Plaintiffs attended only one of the many enrollment meetings held at different Old Golden Eagle locations, but are proposing to represent a class of all Old Golden Eagle employees. (Opp'n at -.) It is undisputed that Plaintiffs did not attend all the meetings and therefore do not have personal knowledge of what was said in those meetings. Nevertheless, Defendants arguments are contradicted by the evidence. According to John St. Martin, the head of Liberty Mutual's Benefit Department, it was Liberty Mutual's intent for the presenters at the employee benefit meetings in to stay consistent with the Facilitator Guide to ensure a consistent message to all Old Golden Eagle employees. (St. Martin Depo. at.) The presenters followed the Facilitator Guide and accompanying slides as a script for the enrollment meetings to achieve this purpose. (See Leamon Decl.; Bond Depo. at & -; Bennett Depo. at,, 0, -, -, &.; Cortez Depo. at 0-,, &. ) Defendants concede the presenters were supposed to and did adhere to the script. (See Opp'n at ("human resources and benefits personnel presented a message consistent with what was in the Facilitator's Guide"); see also Tr. at ). Page 0 of Ms. Cortez deposition transcript is found at Abel Decl. Ex cv

8 Case :0-cv-0-DMS-MDD Document Filed 0/0/ Page of 0 0 Defendants further contend that questions were asked at the meeting attended by Plaintiffs, which may not have been asked in any other meeting. In Plaintiffs meeting, an Old Golden Eagle employee, Bob Doran, asked questions about credit for the years of service with Old Golden Eagle for purposes of retirement. The response was that Old Golden Eagle employees would be given prior service credit toward retirement. (Abel Decl. Ex. (Depo. of Jeannie Sanders ( Sanders Depo. ) at ; Depo. of Pauline Arwood ( Arwood Depo. ) at, & ; Depo. of Thomas Rollason ( Rollason Depo. ) at,,, - & -); see also Decl. of Geoffrey Moyle dated Dec., 0 ( Moyle Decl. at ; Decl. of Jeannie Sanders dated Dec., 0 ( Sanders Decl. ) at ; Decl. of Pauline Arwood dated Dec. 0, 0 ( Arwood Decl. ) at ; & Decl. of Thomas Rollason dated Dec. 0, 0 ( Rollason Decl. ) at.) This did not convey any information inconsistent with or in addition to the presentation slide titled Liberty Mutual Retirement Benefit Plan, which stated in pertinent part, Golden Eagle employees will be credited with service at Golden Eagle for purposes of eligibility to participate, as well as for vesting purposes. (Abel Decl. Ex..) Defendants contention that Plaintiffs were privy to different representations from the majority of the putative class is therefore rejected. Finally, Defendants point to Mr. Rollason's testimony, arguing he admitted he received information regarding Plan benefits through other channels, including personal exchanges with human resource personnel. (Opp'n at.) This argument is not supported by the deposition transcript. Mr. Rollason testified, "When I retired, I did a lot of stuff with human resources." (Rollason Depo. at.) His statement that he communicated with Laura Bond from Liberty Mutual's human resources relates to the time between 00, when Ms. Arwood retired, and 00, when Mr. Rollason retired. (See id. at.) In both instances, the time frame is too remote to be relevant to Defendants representations and disclosures at the time of transition in. To the extent Defendants rely on Mr. Rollason's statement that, as a "little guy," he only "pick[ed] up what [he] gather[ed] from his supervisors and other channels of communications," the testimony is taken out of context and does not support the proposition that the Old Golden Eagle employees received different information about Plan benefits. (See id. at -.) - - 0cv

9 Case :0-cv-0-DMS-MDD Document Filed 0/0/ Page of 0 0 During the transition in, Defendants ensured that all Old Golden Eagle employees received the same information about Plan benefits. This was accomplished by making uniform presentations at the employee enrollment meetings and SPD distribution. Also available was a call-in hotline, where the personnel referred to Plan documents to provide consistent answers about retirement benefits. (St. Martin Depo. at -, & 0-.) It is undisputed that Defendants represented Old Golden Eagle employees would receive prior service credit under the Plan for purposes of eligibility and vesting, and that Defendants made no express representation that Old Golden Eagle employees would not receive prior service credit for purposes of calculating benefit accrual. (Id. at -; see also Decl. of George Kaerth dated Dec. 0, 0 ( Kaerth Decl. ) at ; Butler Decl. Ex. (every decl.); Moyle Decl.; Sanders Decl.; Arwood Decl; & Rollason Decl.) Because Defendants' premise, that Old Golden Eagle employees received varied representations regarding Plan benefits, is not supported by the evidence, their case citations, which rely on non-uniformity of representations to deny class certification, are not persuasive. (See Opp'n at - &,.) Defendants' reliance on In re Sears Retiree Group Life Insurance Litigation, F.R.D. (N.D. Ill. 000), where the plaintiffs attempted to rely on two uniform written representations to the exclusion of many non-uniform representations, is distinguishable for the same reason. Reliance Defendants also contend that the putative class members reliance on Defendants representations is subject to individual proof because "[i]n determining whether each employee's reliance is reasonable, the court must examine the context and circumstances surrounding the statements." (Opp'n at ; see also id. at -.) As discussed above, the context and circumstances were the same for all putative class members. Defendants next maintain commonality is lacking because, although Old Golden Eagle employees may have read and heard the same information about the Plan, they each understood it in his or her own way, and that each class member s detrimental reliance would therefore have to be proven on an individual basis. (See Tr. at - &.) - - 0cv

10 Case :0-cv-0-DMS-MDD Document Filed 0/0/ Page 0 of 0 0 To the extent Plaintiffs are proceeding under section (a)()(b), the provision allows the Court to interpret and enforce the terms of the Plan akin to a simple enforcement of a contract as written, which does not require proof of reliance. CIGNA Corp. v. Amara, U.S., S. Ct., (0). Defendants argument therefore does not apply to this claim. Plaintiffs concede that their breach of fiduciary duty claim, see U.S.C. 0 et seq., includes an element of reliance. (Pls Supp. Brief at -.) However, in cases where, as here, the defendant s representations were made uniformly on a class-wide basis, individual issues of reliance do not preclude class certification. Nelson v. IPALCO Enters., Inc., 00 WL 0 at * (S.D. Ind.); Brieger v. Tellabs, Inc., F.R.D., (N.D. Ill. 00). Alternatively, reliance can be inferred or presumed. Reliance can be inferred from the representation s materiality, Pfahler v. Nat l Latex Prods. Co., F.d, (th Cir. 00), or presumed when the case is based on nondisclosure, In re First Am. Corp. ERISA Litig., 00 WL, * (C.D. Cal.) ( where a plaintiff [in a putative class action] pleads nondisclosure by a fiduciary, the plan participants adequately plead reliance by alleging that they are presumed to have relied on that lack of information ); Nortel Networks Corp. ERISA Litig., 00 WL at * (M.D. Tenn.). Furthermore, reliance can be presumed in ERISA cases based on the legal standard established in the securities fraud arena, as articulated in Affiliated Ute Citizens of Utah v. United States, 0 U.S., - () ( Ute Citizens ). In re Tyco Int l, Ltd, 00 WL, * (D.N.H.); Nauman v. Abbott Labs, 00 WL 0, * (N.D. Ill.); In re YRC Worldwide, Inc. ERISA Litig., 00 WL 0, * (D. Kans.) (mot. to dism.). Ute Citizens held that in cases involving primarily a failure to disclose, positive proof of reliance is not a prerequisite to recovery. 0 U.S. at. Instead, the defendant s obligation to disclose and [his] withholding of a material fact establish the requisite element of causation in fact. Id. at. In the Ninth Circuit, this presumption of reliance applies to cases that are, or can be, cast in omission or non-disclosure terms. Binder v. Gillespie, F.d 0, 0 (th Cir. ) (internal quotation marks and citations omitted). The presumption should not be applied to cases that allege both misstatement and omissions unless the case can be characterized as one that primarily alleges omissions. Id. at 0. The distinction between express - 0-0cv

11 Case :0-cv-0-DMS-MDD Document Filed 0/0/ Page of 0 0 and implied misrepresentations is often a fine line. Poulos v. Caesars World, Inc., F.d, (th Cir. 00). Plaintiffs complaint is framed in terms of representations that years of service with Old Golden Eagle would be credited for purposes of retirement under the Plan, which Plaintiffs contend were misleading in light of what was not disclosed that credit would not apply for purposes of calculating pension benefit accrual. (See, e.g., Compl. at -.) This is reflected in the parties voluminous evidence consisting of Plaintiffs and putative class members declarations and transcripts of Plaintiffs and benefits personnel depositions. Defendants uniformly represented at the enrollment meetings that prior service credit for service with Old Golden Eagle would be given for purposes of eligibility and vesting. Plaintiffs do not dispute that credit was given for these purposes. This representation therefore appears to be technically accurate. Plaintiffs argue, however, it was misleading because Defendants did not add that credit would not be given for purposes of calculating accrued benefits. Accordingly, this action is characterized as one that primarily alleges omissions. Plaintiffs and putative class members reliance can therefore be presumed. Defendants point to many putative class members declarations to argue they did not rely on Defendants representations. Defendants argument may be relevant to rebutting the presumption of reliance. See Blackie v. Barrack, F.d, 0 (th Cir. ) (rebuttal of presumed reliance). The right of rebuttal, however, does not preclude the predominance of common questions, id. at 0 n., and a fortiori does not preclude a finding of commonality. See also Hanon v. Dataproducts Corp., F.d, 0 (th Cir. ). Plaintiffs claim for inadequate SPD disclosures, U.S.C. 0(a), does not require proof of reliance. See CIGNA, S. Ct. at (referring to U.S.C. 0 et al.); see also U.S.C. 0(a) (objective average plan participant standard). Plaintiffs seek equitable remedies for this violation under U.S.C. Section (a)(). Neither section 0(a) nor (a)() set[s] forth any particular standard for determining harm. Id. at. Hence, the requirement of harm must come from the law of equity. Id. Looking to the law of equity, there is no general principle that detrimental reliance must be proved before a remedy is decreed. To the extent any such requirement arises, it is because the specific remedy being contemplated imposes such a requirement cv

12 Case :0-cv-0-DMS-MDD Document Filed 0/0/ Page of 0 0 Id. Plaintiffs seek a number of equitable remedies, including reformation of the Plan to include prior service credit for service with Old Golden Eagle in the calculation of accrued benefits, equitable estoppel, injunctive relief, and surcharge to pay already retired beneficiaries the money they claim is owed them. (See Compl. at,,, -0). With the exception of equitable estoppel, showing of detrimental reliance is not always necessary for other equitable remedies such as reformation and surcharge. CIGNA, S.Ct. at. To the extent it is necessary, reliance can be presumed for the reasons discussed in the context of breach of fiduciary duty. Materiality Defendants next contend that Plaintiffs' claims "raise a host of individualized issues regarding materiality." (Opp'n at.) They do not elaborate on this statement. Nevertheless, Plaintiffs intend to prove materiality of Defendants' omission in a uniform way. They rely on the Rehabilitation Agreement entered into by Liberty Mutual with the California Insurance Commissioner when Liberty Mutual acquired Old Golden Eagle from the conservatorship. For purposes of the acquisition, Liberty Mutual specified that "employees... shall be credited for all prior years of service with GEIC... for purposes of eligibility, vesting and early retirement subsidies under the [Plan]... provided, that such period of service with GEIC will not be credited for purposes of benefit accruals under the [Plan]." (Butler Decl. Ex. at (emphasis added).) Although Liberty Mutual considered the distinction between eligibility and vesting on one hand and benefit accruals on the other hand as sufficiently important to disclose to the Insurance Commissioner, it is undisputed Defendants did not disclose the same distinction in their communications with Old Golden Eagle employees. Plaintiffs proposed proof renders the materiality issue suitable for decision on a class-wide basis. Authority to Make Representations Defendants also suggest commonality is lacking because the issue of authority to make representations on behalf of the Plan would have to be determined on a representation-to-representation basis. (See, e.g., Opp'n at.) Defendants do not allude to any evidence in support of this argument. Their oral representations were made at the enrollment meetings based on the Facilitator Guide prepared by Liberty Mutual. Liberty Mutual prepared the Facilitator Guide and trained the presenters for the purpose of disseminating information about Plan benefits to - - 0cv

13 Case :0-cv-0-DMS-MDD Document Filed 0/0/ Page of 0 0 Old Golden Eagle employees. (See Leamon Decl.) The authority issue therefore lends itself to class treatment as well. Differing Administrative Records Finally, Defendants contend entitlement to relief has to be determined individually based on each Plan participant's own administrative record, which is thousands of pages long in each case. (Opp'n at.) This argument is contradicted by Mr. St. Martin's testimony that each Plaintiff s claim for benefits was denied for the same reason -- Defendants determination that years of service with Old Golden Eagle were not counted for benefit accrual. He further testified that if any of the putative class members made the same claim for pension benefits, the claim would be denied for the same reason. (St. Martin Depo. at -.) Any differences in administrative record therefore do not preclude class certification. Typicality The next requirement of Rule (a) is typicality, which focuses on the relationship of facts and issues between the class and its representatives. "[R]epresentative claims are typical' if they are reasonably co-extensive with those of absent class members; they need not be substantially identical." Hanlon v. Chrysler Corp., 0 F.d 0, 00 (th Cir. ). "The test of typicality is whether other members have the same or similar injury, whether the action is based on conduct which is not unique to the named plaintiffs, and whether other class members have been injured by the same course of conduct." Hanon, F.d at 0 (citation and internal quotation marks omitted). Plaintiffs contend their claims are typical of the proposed class because Defendants' representations regarding Plan benefits were the same as to all class members and affected all members in the same way. Defendants argue the claims are not typical because Plaintiffs did not attend the same benefits presentations, hear the same set of representations concerning other benefits as every other class member, or detrimentally rely on representations in the same way." (Opp'n at 0.) These are the same arguments found unavailing for purposes of commonality, and are rejected for the same reasons. Defendants also note that only Plaintiffs exhausted their administrative remedies before filing suit, while the putative class members did not. (Opp'n at.) To the extent they intended to suggest - - 0cv

14 Case :0-cv-0-DMS-MDD Document Filed 0/0/ Page of 0 0 that this defeats class certification, the argument was rejected in Barnes v. AT&T Pension Benefit Plan-Nonbargained Program, 0 F.R.D. (N.D. Cal. 00). Absent class members in ERISA suits are not required to exhaust administrative remedies. Id. at, citing In re Household Int'l Tax Reduction Plan, F.d 00, 00-0 (th Cir. 00). Furthermore, exhaustion would be futile when the denial of benefits is based on Plan interpretation. Id. Mr. St. Martin testified that all putative class members' claims would be denied for the same reasons as Plaintiffs' claims. Adequacy of Representation Rule (a)() requires a showing that "the representative parties will fairly and adequately protect the interests of the class." Fed. R. Civ. P. (a)(). This requirement is grounded in constitutional due process concerns; "absent class members must be afforded adequate representation before entry of judgment which binds them." Hanlon, 0 F.d at 00, citing Hansberry v. Lee, U.S.,- (0). In reviewing this issue, courts must resolve two questions: "() do the named plaintiffs and their counsel have any conflicts of interest with other class members, and () will the named plaintiffs and their counsel prosecute the action vigorously on behalf of the class?" Id., citing Lerwill v. lnflight Motion Pictures, Inc., F.d 0, (th Cir. )). The named plaintiffs and their counsel must have sufficient "zeal and competence" to protect the interests of the rest of the class. Fendler v. Westgate-California Corp., F.d, 0 (th Cir. ). Defendants argue Plaintiffs are not adequate representatives because the claims they assert are "wholly individualized." (Opp'n at -.) These are the same arguments found unavailing for purposes of commonality, and are rejected for the same reasons. Defendants cite to Spano v. The Boeing Co., F.d, - (th Cir. 0), for the proposition that Plaintiffs are not adequate representatives. (Opp'n at.) The plaintiffs in Spano, participants in a defined contribution plan, filed an ERISA action claiming the defendants caused the plan to pay excessive fees and expenses, that they included imprudent investment options in the plan, and concealed from the participants material information regarding plan investment options as well Renton v. Kaiser Foundation Health Plan, Inc., 00 U.S. Dist. LEXIS 00 (W.D. Wash. 00), cited in Defendants opposition (Defs Supp. Opp n at ), is unpersuasive because the remark that some class members may be subject to the exhaustion requirement is unsupported by any discussion or citation to legal authority cv

15 Case :0-cv-0-DMS-MDD Document Filed 0/0/ Page of 0 0 as its fees and expenses. The Court held the plaintiffs were not adequate representatives for those putative class members who had no complaints about the investment options, in light of the dates when they invested and exited the investment, especially when some of the class members would be harmed if the requested relief were awarded. Id. at. Defendants argue not all Old Golden Eagle employees are complaining about their Plan benefits in light of Defendants representations and omissions, and that Plaintiffs will therefore not adequately represent those interests. Defendants misapprehend Spano. Unlike in Spano, if the requested relief is ultimately granted, every Old Golden Eagle employee s benefit will be calculated in the same way and based on additional years of service. Defendants do not contend that although the Plaintiffs and some class members may benefit, this would harm other class members. The declarations of putative class members cited in support of Defendants argument are not to the contrary. (See Abel Decl. Ex..) Finally, Defendants argue that the relief sought by Plaintiffs will threaten the actuarial soundness of the Plan (through payment of unfunded benefits), thereby harming current employees who are members of the putative class and who have a strong interest in the Plan's actuarial soundness. (Opp n at.) This argument is rejected because Defendants have not offered any factual basis or evidence in its support. Defendants do not maintain that Plaintiffs' attorneys are insufficiently qualified to prosecute this suit. The evidence filed on this point demonstrates Plaintiffs' counsel meet the requirements of Rule (a)() and (g). (See Butler Decl. at- & Exs., ; Winters Decl.) Rule (b) Requirements Having met the requirements of Rule (a), Plaintiffs must also show that case fits into at least one of three types of class actions listed in Rule (b). See United Steel, F.d at 0. Plaintiffs seek certification of a mandatory non opt-out class under Rule (b)() or (), or alternatively, an optout class under Rule (b)(). Rule (b)() and () A class action under Rule (b)()(a) may be maintained if prosecuting separate actions by or against individual class members would create a risk of [ ] inconsistent or varying adjudications with respect to individual class members that would establish incompatible standards of conduct for - - 0cv

16 Case :0-cv-0-DMS-MDD Document Filed 0/0/ Page of 0 0 the party opposing the class[.] Fed. R. Civ. Proc. (b)()(a). This requires more... than a risk that separate judgments would oblige the opposing party to pay damages to some class members but not to others or to pay them different amounts. Zinser v. Accufix Research Inst. Inc., F.d 0, (th Cir. 00) (internal quotation marks and citations omitted). Rule (b)()(a) takes in cases where the party is obliged by law to treat the members of the class alike (a utility acting toward customers; a government imposing a tax), or where the party must treat all alike as a matter of practical necessity (a riparian owner using water as against downriver owners). Amchem Prod., Inc. v. Windsor, U.S., () (internal quotation marks and citation omitted). Accordingly, certification is available when "defendant by reason of the legal relations involved can not as a practical matter pursue two different courses of conduct." Zinser, F.d at (internal quotation marks and citation omitted). "ERISA requires plan administrators to treat all similarly situated participants in a consistent manner." Barnes, 0 F.R.D. at (internal quotation marks and citation omitted), see also John Blair Commc'ns, Inc. Profit Sharing Plan v. Telemundo Group, Inc. Profit Sharing Plan, F.d 0, 0 (nd Cir. ). Most ERISA class action cases are certified under Rule (b)(). Barnes, 0 F.R.D. at (internal quotation marks and citation omitted). The gravamen of Plaintiffs action is that the years of service with Old Golden Eagle should be included in the calculation of Plan benefits. It is undisputed that absent an order of the Court, Defendants would deny any putative class member s claim for benefits because Defendants do not interpret the Plan as including the years of service with Old Golden Eagle in the benefit calculation. (See St. Martin Depo. at -.) Plaintiffs request the Court to order Defendants to pay benefits, as they become due, based on a calculation including the years of service with the Old Golden Eagle. To the extent benefits have already been paid based on a calculation which did not include those years, they request the class members be paid the difference. If putative class members are required to prosecute separate actions, there is a risk that different courts could reach different conclusions on the issue whether the years of service with the Old Golden Eagle should be included in the calculation of benefits under the Plan. See Barnes, 0 F.R.D. at. Defendants do not dispute that prosecuting separate actions could result in inconsistent Plan interpretations subjecting them to incompatible - - 0cv

17 Case :0-cv-0-DMS-MDD Document Filed 0/0/ Page of 0 0 standards of conduct given their legal duty to treat putative class members in a consistent manner. Certification under Rule (b)()(a) is therefore appropriate. A class action under Rule (b)()(b) may be maintained if prosecuting separate actions by or against individual class members would create a risk of [ ] adjudications with respect to individual class members that, as a practical matter, would be dispositive of the interests of the other members not parties to the individual adjudications or would substantially impair or impede their ability to protect their interests[.] Fed. R. Civ. Proc. (b)()(b). This speaks from the vantage point within the class [to] situations where lawsuits conducted with individual members of the class would have the practical if not technical effect of concluding the interests of the other members as well, or of impairing the ability of the others to protect their own interests. Ortiz v. Fireboard Corp., U.S., () (internal quotation marks and citation omitted). Among the traditional varieties of representative suit encompassed by Rule (b)()(b) were those involving the presence of property which called for distribution or management, including suits involving the adjudication of the rights of all participants in a fund in which the participants had common rights. Id. at, n. (internal quotation marks, brackets and citations omitted). In such cases, regardless of the size of any individual claimant s stake, the adjudication would determine the operating rules governing the fund for all participants. Id. at n.. For the reasons stated with respect to certification under Rule (b)()(a), an adjudication of any one putative class action member s claim for benefits based on a calculation including the years of service with the Old Golden Eagle would obligate Defendants to treat the remaining members the same. See Barnes, 0 F.R.D. at. Certification is therefore also appropriate under Rule (b)()(b). Because certification of a mandatory class is appropriate under Rule (b)(), the Court need not reach the issue whether certification of a mandatory class is also available under Rule (b)(). Rule (b)() Alternatively, Plaintiffs seek certification under Rule (b)(), which is proper when "the questions of law or fact common to class members predominate over any questions affecting only individual members, and... a class action is superior to other available methods for fairly and - - 0cv

18 Case :0-cv-0-DMS-MDD Document Filed 0/0/ Page of 0 0 efficiently adjudicating the controversy." Fed. R. Civ. Proc. (b)(). For the reasons that follow, certification is appropriate on this alternative basis. "The predominance inquiry focuses on the relationship between the common and individual issues and tests whether the proposed class [is] sufficiently cohesive to warrant adjudication by representation." Vinole v. Countrywide Home Loans, Inc., F.d, (th Cir. 00) (internal quotation marks, footnote and citation omitted). Based on the detailed discussion in the context of commonality, common issues predominate over individual issues because Defendants representations to the putative class were uniform and even reliance and materiality are susceptible to class-wide proof. Furthermore, any monetary relief would be calculated under the same formula for each class member based on the interpretation or reformation of the Plan, with the only relevant variable being each member's years of service at Old Golden Eagle. This individual damage calculation does not preclude a finding that common issue predominate over individual issues. Yokoyama v. Midland Nat'l Life Ins. Co., F.d 0, 0 (th Cir. 00). Plaintiffs case therefore meets the predominance requirement. The superiority inquiry requires the consideration of: (A) the class members' interests in individually controlling the prosecution or defense of separate actions; (B) the extent and nature of any litigation concerning the controversy already begun by or against class members; (C) the desirability or undesirability of concentrating the litigation of the claims in the particular forum; and (D) the likely difficulties in managing a class action. Fed. R. Civ. Proc. (b)(). This inquiry "requires the court to determine whether maintenance of this litigation as a class action is efficient and whether it is fair," such that the proposed class is superior to other methods for adjudicating the controversy. Wolin v. Jaguar Land Rover N. Am., LLC, F.d, - (th Cir. 00). Class action treatment of this case is superior to individual actions for all the reasons discussed in the context of Rule (b)() certification. Individual actions by putative class members would be expensive, time-consuming, and would create the risk of conflicting decisions. Furthermore, proof is largely uniform for all class members, and would therefore preclude any great difficulties in managing this action if a class is certified. Finally, no other actions concerning the instant controversy - - 0cv

19 Case :0-cv-0-DMS-MDD Document Filed 0/0/ Page of 0 have been filed. (Decl. of Matthew Butler in Supp. of Pls Supp. Brief at.) For the foregoing reasons, a class action is alternatively certified under Rule (b)(). Accordingly, it is hereby ORDERED:. Plaintiffs motion for class certification is granted pursuant to Federal Rule of Civil Procedure (b)(), and alternatively pursuant to Rule (b)(), for the class defined as: all former employees of Golden Eagle Insurance Company who are or were employed by Liberty Mutual Group Inc. and/or Liberty Mutual Insurance Company starting October,, who participated or are participating in the Liberty Mutual Retirement Benefit Plan, and who were or will be denied credit for all years of service with Old Golden Eagle for the purposes of calculating all benefits owed to them under the Plan from October, to the present.. Plaintiffs are hereby appointed as class representatives and their counsel are appointed as counsel for the class.. Although class certification is based on Rule (b)(), class counsel shall give notice to class members of the pendency of this action. No later than April, 0, the parties shall jointly file a motion for approval of their proposed form of notice, method of distributing it to the class members, and time for distributing it. The proposal shall comply with Rule (c)()(b), with the exception of the notice of right to opt out of the class. IT IS SO ORDERED. DATED: April 0, 0 0 HON. DANA M. SABRAW United States District Judge - -