1 UNITED STATES DISTRICT COURT 2 NORTHERN DISTRICT OF CALIFORNIA 3 4 SCOTT HOFFMAN, et al., Case No. 23-cv-04068-PCP (SVK)
5 Plaintiffs, ORDER RE DISCOVERY DISPUTE 6 v. Re: Dkt. No. 98 7 LIFE INSURANCE COMPANY OF THE SOUTHWEST, 8 Defendant. 9 10 Before the Court is the Parties’ Joint Discovery Statement (“Joint Statement”) pursuant to 11 which named Plaintiff Krimbow (“Plaintiff”) seeks to compel production of documents from 12 Defendant Life Insurance Company of the Southwest (“Defendant” or “LICS”). Having reviewed 13 the litigation history between the Parties, the relevant law and the Joint Statement, the Court 14 determines that this matter may be resolved without oral argument. Civ. L.R. 7-1(b). 15 Plaintiff Krimbow was one of several Plaintiffs in this putative class action asserting that 16 Defendant charged undisclosed fees for deferred indexed annuity products in violation of the 17 California Education Code and Unfair Competition Law. Dkt. 33. Following a motion to dismiss, 18 only Plaintiff Krimbow’s claim arising out of an undisclosed rider fee on a registered indexed 19 annuity survived. Order Granting in Part Motion to Dismiss (“MTD Order”), Dkt. 80. Plaintiff 20 was given leave to amend, but did not do so. Id. The Parties now dispute the scope of relevant 21 discovery. In particular, the Parties dispute whether Plaintiff’s definitions of “Rider Fees” and 22 “Indexed Annuity 403(b) Products” are relevant and proportional in light of the MTD Order. 23 I. “Fees” 24 To address this issue, an overview of the pleadings and discovery that address “fees” is 25 helpful. 26 A. Amended Complaint (Dkt. 33) 27 In relevant part for this dispute, the Amended Complaint alleges as follows: 1 SecurePlus Platinum from September 17, 2019 through 2023. Within the past four 2 years, Krimbow has incurred fees within this product that were illegal pursuant to 3 Cal. Educ. Code §§ 25101, 25107 because they were not disclosed as required by 4 the Code. 5 ******** 6 127. Plaintiff Krimbow was also charged rider fees that were not disclosed on the 7 Website. Between September 2019 (when Krimbow first invested in the SecurePlus 8 Platinum product) and 2023, the Website has stated that the SecurePlus Platinum 9 product offered an optional Guaranteed Lifetime Income Rider, and that investors 10 who selected the rider would pay annual fees of between 0.65% and 0.75% of their 11 account balance. Krimbow selected this rider when opening her account, but was 12 charged an annual rate of 0.90% for the rider over the next four years, 20% higher 13 than the maximum rate disclosed on the Website. 14 The Amended Complaint defines “Direct Fees” only with a description of “Riders”: 15 2. Direct Fees 16 91. Riders. When an investor signs up for an indexed annuity, they can choose to 17 purchase a “rider,” which provides additional features in the contract. Riders may 18 provide additional flexibility regarding when money can be withdrawn without 19 penalty (e.g., disability or nursing home confinement), how money is credited (e.g., 20 provides a boost to the Crediting Strategies or limits the fees), or how much money 21 can be withdrawn (e.g., allowing guaranteed minimum withdrawal amounts where 22 certain criteria are met). Most riders come with a direct fee that is deducted from 23 the contract value. 24 The Amended Complaint also contains class allegations. Dkt. 33 at 29. 25 B. MTD Order (Dkt. 80) 26 Much of the MTD focused on whether various undisclosed fees can support a cause of 27 action under the UCL. MTD Order, 9-11. Relevant to the dispute at hand, Defendant cogently 1 Judge Pitts rejected Plaintiff’s broad view of the term “fees,” holding that caps, 2 participation rates, and spreads are not “fees” even if they can “directly affect the 3 investor’s rate of return.” 4 Joint Statement at 8 (emphasis in original). In ultimately allowing Plaintiff Krimbow’s claim, the 5 Court stated: 6 Krimbow has thus adequately pleaded that she was charged a fee associated with a 7 registered 403(b) product that was not disclosed in violation of Section 25107. 8 This suffices to state a claim under the UCL’s unlawful prong. 9 MTD Order at 13 (emphasis in original). Plaintiff acknowledges that, “[T]he Court granted 10 Defendant’s motion to dismiss as to indirect fees and as to unregistered products” and that 11 “[P]laintiff’s remaining claims therefore relate to direct fees charged in connection with registered 12 products.” Joint Statement at 1, 2 (emphasis in original). 13 C. RFPs 14 In the RFPs, Plaintiff uses the term “Rider Fees,” which she defines as follows: 15 “Rider Fees” means charges related to an Indexed Annuity 403(b) Product that 16 directly reduce the investor’s account balance.” 17 Dkt. 98-2 at 2. 18 D. Joint Statement 19 Finally, in the Joint Statement, Plaintiff revises her proposed class: 20 In light of the Court’s Order, Plaintiff seeks to represent a class of investors who 21 share the following characteristics: 1) they purchased a registered product from 22 Defendant and 2) they were charged an undisclosed direct fee. 23 Joint Statement at 2. 24 ******** 25 Plaintiff now seeks discovery covering all direct fees for registered products that should 26 have been disclosed on Defendant’s website. Joint Statement at 3. Defendant objects to the extent 27 the RFPs cover fees other than the specific rider fee paid for by Plaintiff or products beyond the 1 E. Discussion 2 In evaluating discovery in putative class actions, the Court looks to the proposed class 3 definition along with other pertinent allegations in the operative complaint. Here the Court’s 4 process is also informed by the MTD Order, which alters the scope of the Amended Complaint 5 and its proposed class. As set forth above, pursuant to the MTD Order, only direct fees are 6 relevant. The Amended Complaint provides a single example of a “Direct Fee”: a “rider” which 7 is a fee that “provides additional features in the contract.” Amended Complaint ¶ 91. By contrast, 8 the RFPs define “Rider Fees” much more broadly as any charge that directly reduces the 9 investor’s account balance. Dkt. 98-2. The Court shares Defendant’s concern that Plaintiff’s 10 definition of “Rider Fees” in the RFPs is not in accord with Judge Pitts’ MTD Order. However, 11 the Court does not agree with Defendant that “Rider Fee” must be limited to the specific rider that 12 Plaintiff purchased. Joint Statement at 7-8. The allegations in the Amended Complaint support a 13 definition of “Rider Fees” limited to fees that provide additional features in the contract. 14 Accordingly, the Court ORDERS as follows: “Rider Fees” shall be limited to fees that provide 15 additional features in the contract. 16 II. Annuity Products 17 In the Joint Statement, the Parties both recognize that only registered products remain at 18 issue and that there are 18 such products, including the specific annuity purchased by Plaintiff. 19 The RFPs that address “Products,” each provide the following definition: 20 ‘Indexed Annuity 403(b) Products’ means ‘a fixed annuity whose yield return is 21 partially based on an equities Index.’ 22 Dkt. 98-2. Thus, Plaintiff seeks discovery directed to all 18 registered products. Joint Statement, 23 4-5. Defendant objects, arguing that discovery should be limited to only the annuity purchased by 24 Plaintiff, the SecurePlus Platinum annuity. Id. at 8-9. Defendant acknowledges that a plaintiff 25 may bring claims for products it did not purchase, provided that plaintiff’s claims are 26 “substantially similar” to injuries suffered by putative class members. Id. at 8, citing McKinney v. 27 Corsair Gaming, Inc., 646 F. Supp. 3d 1133, 1141 (N.D. Cal. 2022). 1 undisclosed changes to rider fees, as defined in section I above, applied to registered products. 2 || MTD Order at 13. That is the harm allegedly suffered by Plaintiff and, via the class allegations, 3 putative class members.
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1 UNITED STATES DISTRICT COURT 2 NORTHERN DISTRICT OF CALIFORNIA 3 4 SCOTT HOFFMAN, et al., Case No. 23-cv-04068-PCP (SVK)
5 Plaintiffs, ORDER RE DISCOVERY DISPUTE 6 v. Re: Dkt. No. 98 7 LIFE INSURANCE COMPANY OF THE SOUTHWEST, 8 Defendant. 9 10 Before the Court is the Parties’ Joint Discovery Statement (“Joint Statement”) pursuant to 11 which named Plaintiff Krimbow (“Plaintiff”) seeks to compel production of documents from 12 Defendant Life Insurance Company of the Southwest (“Defendant” or “LICS”). Having reviewed 13 the litigation history between the Parties, the relevant law and the Joint Statement, the Court 14 determines that this matter may be resolved without oral argument. Civ. L.R. 7-1(b). 15 Plaintiff Krimbow was one of several Plaintiffs in this putative class action asserting that 16 Defendant charged undisclosed fees for deferred indexed annuity products in violation of the 17 California Education Code and Unfair Competition Law. Dkt. 33. Following a motion to dismiss, 18 only Plaintiff Krimbow’s claim arising out of an undisclosed rider fee on a registered indexed 19 annuity survived. Order Granting in Part Motion to Dismiss (“MTD Order”), Dkt. 80. Plaintiff 20 was given leave to amend, but did not do so. Id. The Parties now dispute the scope of relevant 21 discovery. In particular, the Parties dispute whether Plaintiff’s definitions of “Rider Fees” and 22 “Indexed Annuity 403(b) Products” are relevant and proportional in light of the MTD Order. 23 I. “Fees” 24 To address this issue, an overview of the pleadings and discovery that address “fees” is 25 helpful. 26 A. Amended Complaint (Dkt. 33) 27 In relevant part for this dispute, the Amended Complaint alleges as follows: 1 SecurePlus Platinum from September 17, 2019 through 2023. Within the past four 2 years, Krimbow has incurred fees within this product that were illegal pursuant to 3 Cal. Educ. Code §§ 25101, 25107 because they were not disclosed as required by 4 the Code. 5 ******** 6 127. Plaintiff Krimbow was also charged rider fees that were not disclosed on the 7 Website. Between September 2019 (when Krimbow first invested in the SecurePlus 8 Platinum product) and 2023, the Website has stated that the SecurePlus Platinum 9 product offered an optional Guaranteed Lifetime Income Rider, and that investors 10 who selected the rider would pay annual fees of between 0.65% and 0.75% of their 11 account balance. Krimbow selected this rider when opening her account, but was 12 charged an annual rate of 0.90% for the rider over the next four years, 20% higher 13 than the maximum rate disclosed on the Website. 14 The Amended Complaint defines “Direct Fees” only with a description of “Riders”: 15 2. Direct Fees 16 91. Riders. When an investor signs up for an indexed annuity, they can choose to 17 purchase a “rider,” which provides additional features in the contract. Riders may 18 provide additional flexibility regarding when money can be withdrawn without 19 penalty (e.g., disability or nursing home confinement), how money is credited (e.g., 20 provides a boost to the Crediting Strategies or limits the fees), or how much money 21 can be withdrawn (e.g., allowing guaranteed minimum withdrawal amounts where 22 certain criteria are met). Most riders come with a direct fee that is deducted from 23 the contract value. 24 The Amended Complaint also contains class allegations. Dkt. 33 at 29. 25 B. MTD Order (Dkt. 80) 26 Much of the MTD focused on whether various undisclosed fees can support a cause of 27 action under the UCL. MTD Order, 9-11. Relevant to the dispute at hand, Defendant cogently 1 Judge Pitts rejected Plaintiff’s broad view of the term “fees,” holding that caps, 2 participation rates, and spreads are not “fees” even if they can “directly affect the 3 investor’s rate of return.” 4 Joint Statement at 8 (emphasis in original). In ultimately allowing Plaintiff Krimbow’s claim, the 5 Court stated: 6 Krimbow has thus adequately pleaded that she was charged a fee associated with a 7 registered 403(b) product that was not disclosed in violation of Section 25107. 8 This suffices to state a claim under the UCL’s unlawful prong. 9 MTD Order at 13 (emphasis in original). Plaintiff acknowledges that, “[T]he Court granted 10 Defendant’s motion to dismiss as to indirect fees and as to unregistered products” and that 11 “[P]laintiff’s remaining claims therefore relate to direct fees charged in connection with registered 12 products.” Joint Statement at 1, 2 (emphasis in original). 13 C. RFPs 14 In the RFPs, Plaintiff uses the term “Rider Fees,” which she defines as follows: 15 “Rider Fees” means charges related to an Indexed Annuity 403(b) Product that 16 directly reduce the investor’s account balance.” 17 Dkt. 98-2 at 2. 18 D. Joint Statement 19 Finally, in the Joint Statement, Plaintiff revises her proposed class: 20 In light of the Court’s Order, Plaintiff seeks to represent a class of investors who 21 share the following characteristics: 1) they purchased a registered product from 22 Defendant and 2) they were charged an undisclosed direct fee. 23 Joint Statement at 2. 24 ******** 25 Plaintiff now seeks discovery covering all direct fees for registered products that should 26 have been disclosed on Defendant’s website. Joint Statement at 3. Defendant objects to the extent 27 the RFPs cover fees other than the specific rider fee paid for by Plaintiff or products beyond the 1 E. Discussion 2 In evaluating discovery in putative class actions, the Court looks to the proposed class 3 definition along with other pertinent allegations in the operative complaint. Here the Court’s 4 process is also informed by the MTD Order, which alters the scope of the Amended Complaint 5 and its proposed class. As set forth above, pursuant to the MTD Order, only direct fees are 6 relevant. The Amended Complaint provides a single example of a “Direct Fee”: a “rider” which 7 is a fee that “provides additional features in the contract.” Amended Complaint ¶ 91. By contrast, 8 the RFPs define “Rider Fees” much more broadly as any charge that directly reduces the 9 investor’s account balance. Dkt. 98-2. The Court shares Defendant’s concern that Plaintiff’s 10 definition of “Rider Fees” in the RFPs is not in accord with Judge Pitts’ MTD Order. However, 11 the Court does not agree with Defendant that “Rider Fee” must be limited to the specific rider that 12 Plaintiff purchased. Joint Statement at 7-8. The allegations in the Amended Complaint support a 13 definition of “Rider Fees” limited to fees that provide additional features in the contract. 14 Accordingly, the Court ORDERS as follows: “Rider Fees” shall be limited to fees that provide 15 additional features in the contract. 16 II. Annuity Products 17 In the Joint Statement, the Parties both recognize that only registered products remain at 18 issue and that there are 18 such products, including the specific annuity purchased by Plaintiff. 19 The RFPs that address “Products,” each provide the following definition: 20 ‘Indexed Annuity 403(b) Products’ means ‘a fixed annuity whose yield return is 21 partially based on an equities Index.’ 22 Dkt. 98-2. Thus, Plaintiff seeks discovery directed to all 18 registered products. Joint Statement, 23 4-5. Defendant objects, arguing that discovery should be limited to only the annuity purchased by 24 Plaintiff, the SecurePlus Platinum annuity. Id. at 8-9. Defendant acknowledges that a plaintiff 25 may bring claims for products it did not purchase, provided that plaintiff’s claims are 26 “substantially similar” to injuries suffered by putative class members. Id. at 8, citing McKinney v. 27 Corsair Gaming, Inc., 646 F. Supp. 3d 1133, 1141 (N.D. Cal. 2022). 1 undisclosed changes to rider fees, as defined in section I above, applied to registered products. 2 || MTD Order at 13. That is the harm allegedly suffered by Plaintiff and, via the class allegations, 3 putative class members. Accordingly, the Court ORDERS as follows: Defendant’s objection as 4 || to the scope of “Products” is overruled, and all 18 Indexed Annuity 403(b) Products are properly 5 included in the RFPs. 6 || Il. Relevant Time Period 7 The Parties do not address the “Relevant Time Period” in the Joint Statement, though their 8 competing definitions are clear on the face of Plaintiff's RFPs and Defendant’s Responses. 9 Dkt. 98-2; Dkt. 98-3. In the RFPs, Plaintiff seeks documents from “June 26, 2018 to the Present.” 10 || However, in the Joint Statement, Plaintiff states that the period of her investment is “September 11 2019 through 2023.” Dkt. 98 at 1. Defendant, in its objections to the RFPs, asserts that the 12 || relevant time period is “June 26, 2019 to June 26, 2023” without explanation. The current posture 13 of the Amended Complaint, as informed by the MTD Order, dictates that the relevant time period 14 || would be that in which the Plaintiff and the putative class members suffered substantially similar 3 15 injuries. Accordingly, the Court ORDERS as follows: discovery is limited to the period of a 16 || Plaintiff's investment in the SecurePlus Platinum annuity. The Parties are to meet and confer 3 17 regarding the exact temporal boundaries. 18 IV. Remaining Disputes 19 Defendant also objects to the breadth of RFP 7, 13 and 14 as disproportionate to the needs 20 || the case. Joint Statement at 10. Although Plaintiff does not specifically respond to these 21 concerns, the Court infers Plaintiff's position from the arguments made in support of the scope of 22 || discovery as to fees and products. The Court’s rulings on these issues are set forth in the attached 23 || Exhibit A. 24 SO ORDERED. 25 || Dated: April 9, 2025 26 Suisse eK SUSAN VAN KEULEN 27 United States Magistrate Judge 28