Celedonia Yue v. Conseco Life Insurance Company

Filing 29

Submitted (ECF) Cross-Appeal Reply Brief brief for review. Submitted by Appellee Celedonia X. Yue in 11-55275, Appellant Celedonia X. Yue in 11-55359. Date of service: 01/17/2012. [8034387] [11-55275, 11-55359] (TPD)

Docket Nos. 11-55275 (L), 11-55359
In the

United States Court of Appeals
For the

Ninth Circuit
CELEDONIA X. YUE, M.D.,
on behalf of the class of others similarly situated and on behalf of the General Public,
Plaintiff-Appellee,
v.
CONSECO LIFE INSURANCE COMPANY,
Successor: Philadelphia Life Insurance Company,
fka Massachusetts General Life Insurance Company,
Defendant-Appellant.
_______________________________________

On Appeal from the United States District Court for the Central District of California,
No. 08-CV-01506 · Honorable A. Howard Matz

FOURTH BRIEF ON CROSS-APPEAL
TIMOTHY P. DILLON, ESQ.
LAW OFFICES OF TIMOTHY P. DILLON
1925 Century Park East, Suite 1700
Los Angeles, California 90067
[phone] Telephone
[phone] Facsimile

ANDREW S. FRIEDMAN, ESQ.
FRANCIS J. BALINT, JR., ESQ.
BONNETT, FAIRBOURN,
FRIEDMAN & BALINT, P.C.
2901 North Central Avenue, Suite 1000
Phoenix, Arizona 85012
[phone] Telephone
[phone] Facsimile

Attorneys for Plaintiff-Appellee Celedonia X. Yue, M.D.

PRINTED ON RECYCLED PAPER

TABLE OF CONTENTS

TABLE OF AUTHORITIES……………………………………………… ii
REPLY BRIEF ON CROSS-APPEAL……………………………………. 1
CERTIFICATE OF COMPLIANCE……………………………………… 6
STATEMENT OF RELATED CASES…………………………………… 7
CERTIFICATE OF SERVICE…………………………………………….

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TABLE OF AUTHORITIES
CASES
Albano v. Shea Homes Ltd. P’ship.
634 F.3d 524 (9th Cir. 2011)………………………………………..

5

Aryeh v. Canon Business Solutions, Inc.
116 Cal.Rptr.3d 881 (2010)………………………………………… 1, 3, 4, 5
Beaver v. Tarsadia Hotels
2011 WL 6098165 (S.D. Cal. Dec. 6, 2011)………………………... 4
Betz v. Trainer Wortham & Co.
236 Fed. Appx. 253 (9th Cir. 2007)………………………………… 2, 3
Broberg v. Guardian Life Ins. Co.
171 Cal.App.4th 912 (2009)………………………………………... 4
Burdick v. Union Sec. Ins. Co.
2009 WL 4798873 (C.D. Cal. Dec 9, 2009)………………………... 3
Garcia v. Coleman,
2008 WL 4166854 (N.D. Cal. Sept. 8, 2008)……………………..... 3
Grisham v. Phillip Morris USA, Inc.
40 Cal.4th 623 (2007)………………………………………………. 1, 2, 3
Hameed v. IHOP Franchising, LLC,
2011 WL 590905 (E.D. Cal. Feb. 10, 2011)………………………... 4
Karl Storz Endoscopy-Am., Inc. v. Surgical Techs., Inc.
285 F.3d 848 (9th Cir. 2002)………………………………………..

1, 2, 3, 4

Portney v. CIBA Vision Corp.
2009 WL 305488 (C.D. Cal. Feb. 6, 2009)…………………………. 3
Vaccarino v. Midland Nat. Life Ins. Co.
2011 WL 5593883 (C.D. Cal. Nov. 14, 2011)……………………… 3
Whelan v. BDR Thermea
2011 WL 6182329 (N.D. Cal. Dec. 13, 2011)……………………… 3

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STATUTES AND RULES
Cal. Bus. & Prof. Code
§ 17200 et seq. ……………………………………………………... 1
Cal. Rules of Court
Rule 8.887…………………………………………………………... 5
Fed. R. App. P.
Rule 28.1……………………………………………………………. 6
Rule 32……………………………………………………………… 6
Ninth Cir. R.
28-2.6……………………………………………………………….. 7
OTHER AUTHORITIES
Stern, Bus. & Prof. C. § 17200 Practice
§ 5:291 (2011)………………………………………………………. 4

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REPLY BRIEF ON CROSS-APPEAL
In its opposition to the cross-appeal of Plaintiff-Appellee Celedonia X. Yue
(“Yue”), Defendant-Appellant Conseco Life Insurance Company (“Conseco”)
makes five seriatim arguments why the flat statement in Karl Storz EndoscopyAm., Inc. v. Surgical Techs., Inc., 285 F.3d 848, 857 (9th Cir. 2002) that the
discovery rule does not apply to claims under Cal. Bus. & Prof. Code § 17200,
et. seq. (“UCL”) governs Plaintiff’s UCL claim, notwithstanding the subsequent
pronouncement of the matter as an open issue by the California Supreme Court
and the anticipated pending resolution of the open question by that Court in Aryeh
v. Canon Business Solutions, Inc., 116 Cal.Rptr.3d 881 (2010). None are welltaken.
First, Conseco argues that the district court was obligated to follow Karl
Storz. That is precisely the problem and Yue’s reason for cross-appeal. The flat
statement of California law in Karl Storz is undermined by the California Supreme
Court’s subsequent express recognition in Grisham v. Phillip Morris USA, Inc.,
40 Cal.4th 623, 634 n.7 (2007) that, to the contrary, application of the discovery
rule is “not settled under California law.” Conseco in response simply ignores
Grisham. The Ninth Circuit itself acknowledged the open question after Grisham
in Betz v. Trainer Wortham & Co., 236 Fed. Appx. 253, 256 (9th Cir. 2007) (it
remains “an open question under California law whether the discovery rule applies

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to unfair business practices claims”). Conseco in response simply ignores Betz.
Certainly, at a minimum, it is fair to say that the blanket statement in Karl Storz
is undercut by the California Supreme Court’s acknowledgement in Grisham
that matter is instead an open question under California law.
Second, even though the California Supreme Court’s statement certainly
“undermines” the reasoning of the contrary statement in Karl Storz, Conseco
argues that this Court should not “overturn” Karl Storz out of a sense of “restraint
and comity” to the prior panel. Third Br. at 47. It is hard to see how the panel
could be offended by subsequent developments under California law or subsequent
statements by the California Supreme Court on an issue it had not previously
addressed. In any event, overturning Karl Storz is not the only option; indeed
Plaintiff seeks only a determination that the flat statement of Karl Storz is not
binding in this case. Second Br. at 66. This Court can and should simply
distinguish Karl Storz, given (a) the subsequent developments in California law
that admit to exceptions to the flat rule stated in Karl Storz, and (b) the district
court’s finding in this case that:
the injury and the act causing the injury were both nigh to impossible
for Plaintiff to detect in October 2002. Conseco does not disclose the
actual cost of insurance rates to policyholders but only advises as to
monthly cost of insurance charge deducted from the account value.
In addition, [Conseco] did not at any point notify policyholders of the
upcoming change of rates in their policies. Further, the actual
increases would not be visible in a policyholder’s annual report until
Year 21 when the rates increase.
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ER 37-38 (citations and footnote omitted). Alternatively, simply deferring
resolution of Plaintiff’s cross-appeal pending the California Supreme Court’s
ruling in Aryeh would in no way offend comity.
Third, Conseco disputes the suggestion that Karl Storz’s flat rejection of any
discovery rule is “outdated”– not because that statement is consistent with Grisham
and other California case law (it plainly is not), but because many courts within
this circuit have, like Judge Matz, followed Karl Storz as precedent. Third Br. at
47-48. But, by the same token, other courts within the Ninth Circuit have not,
leading to inconsistent outcomes. See, e.g., Burdick v. Union Sec. Ins. Co., 2009
WL 4798873, at *10 & n. 16 (C.D. Cal. Dec 9, 2009) (applying discovery rule to
UCL claim following Betz); Whelan v. BDR Thermea, 2011 WL 6182329, at *4
(N.D. Cal. Dec. 13, 2011) (declining to summarily follow Karl Storz on motion to
dismiss); Vaccarino v. Midland Nat. Life Ins. Co., 2011 WL 5593883, at *5-6
(C.D. Cal. Nov. 14, 2011) (delayed discovery rule acknowledged despite Karl
Storz, though inadequately pled); Portney v. CIBA Vision Corp., 2009 WL 305488,
at *7 (C.D. Cal. Feb. 6, 2009) (acknowledging possible application of discovery in
denying motion to dismiss); Garcia v. Coleman, 2008 WL 4166854, at *10 (N.D.
Cal. Sept. 8, 2008) (assuming for purposes of summary judgment that discovery
rule applies, in light of Grisham). Conseco in response simply ignores Burdick,
Whelan, Vaccarino and Garcia.

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Fourth, Conseco attempts to harmonize the flat statement in Karl Storz
with Broberg v. Guardian Life Ins. Co., 171 Cal.App.4th 912, 920-21, review
denied, (2009). See Third Br. at 49 (“Broberg neither ‘overrules’ Karl Storz nor
even disagrees with it.”). Yue should have the same opportunity to distinguish
Karl Storz below: if Broberg is consistent with Karl Storz, then Yue should have
the opportunity to argue application of the discovery rule in this case is consistent
with Broberg.
Fifth and finally, Conseco argues that the California Supreme Court might
not resolve the open issue in Aryeh despite of its grant of review, because the
Supreme Court’s website not surprisingly includes a disclaimer that warns the
general public that the Court may not ultimately address issues which it has
accepted review. No one can deny that the Court may, for some reason, decline to
resolve an issue that it specifically accepted for review. But that is not expected
here. See, e.g., Beaver v. Tarsadia Hotels, 2011 WL 6098165, at *10 (S.D. Cal.
Dec. 6, 2011) (declining to dismiss UCL claim on limitations grounds pending the
ruling in Aryeh); see also Hameed v. IHOP Franchising, LLC, 2011 WL 590905,
at *3 n.5 (E.D. Cal. Feb. 10, 2011) (noting the possibility of a resolution of the
issue in Aryeh); Stern, Bus. & Prof. C. § 17200 Practice, § 5:291 (2011) (noting
California Supreme Court’s acceptance of the issue in Aryeh). Application of the
discovery rule to UCL claims is a major issue of California jurisprudence given

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the extent of UCL practice in the State. The matter is fully briefed in Aryeh
and awaiting disposition.
In the unlikely event that the Supreme Court does not resolve the matter
in Aryeh, this Court could, as a final alternative, certify the issue to the California
Supreme Court under California Rules of Court, Rule 8.548. See, e.g., Albano v.
Shea Homes Ltd. P’ship., 634 F.3d 524 (9th Cir. 2011) (certifying open issue of
state law to the Arizona Supreme Court).

Respectfully submitted,
Dated: January 17, 2012

LAW OFFICES OF TIMOTHY P. DILLON
By: s/ Timothy P. Dillon
Timothy P. Dillon

Dated: January 17, 2012

BONNETT, FAIRBOURN,
FRIEDMAN & BALINT, PC
By: s/ Andrew S. Friedman
Andrew S. Friedman
Attorneys for Plaintiff-Appellee

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CERTIFICATE OF COMPLIANCE
I certify that:
This brief complies with the brief size permitted by Federal Rules of
Appellate Procedure, Rule 28.1(e)(2)(B)(i). The brief’s type size and type face
complies with Federal Rules of Appellate Procedure, Rule 32(a)(5) and (6). This
brief is proportionately spaced, has a typeface of 14 points and contains 1,082
words.
Respectfully submitted,
Dated: January 17, 2012

LAW OFFICES OF TIMOTHY P. DILLON
By: s/ Timothy P. Dillon
Timothy P. Dillon

Dated: January 17, 2012

BONNETT, FAIRBOURN,
FRIEDMAN & BALINT, PC
By: s/ Andrew S. Friedman
Andrew S. Friedman
Attorneys for Plaintiff-Appellee

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STATEMENT OF RELATED CASES
In accordance with Ninth Circuit Rule 28-2.6, Plaintiff states there are no
related cases, but these appeals are related to appeal no. 11-56579 in this Court as
it involves the district court’s award of attorneys’ fees.
Dated: January 17, 2012

s/Timothy P. Dillon

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CERTIFICATE OF SERVICE
I hereby certify that on January 17, 2012, I electronically filed the foregoing
with the Clerk of the Court for the United States Court of Appeals for the Ninth
Circuit by using the appellate CM/ECF system.
I certify that all participants in the case are registered CM/ECF users and
that service will be accomplished by the appellate CM/ECF system.
s/

Stephen Moore

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