Phan v. Transamerica Premier Life Insurance Company

Filing 112

ORDER GRANTING 101 MOTION TO STAY AND TERMINATING 75 MOTION TO CERTIFY CLASS WITHOUT PREJUDICE. Signed by Judge Beth Labson Freeman on 11/13/23. (blflc2, COURT STAFF) (Filed on 11/13/2023)

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UNITED STATES DISTRICT COURT

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NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

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DUNG PHAN,
Plaintiff,

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ORDER GRANTING STAY

v.

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Case No. 20-cv-03665-BLF

[Re: ECF 101]
TRANSAMERICA PREMIER LIFE
INSURANCE COMPANY,

United States District Court
Northern District of California

Defendant.
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Defendant Transamerica Premier Life Insurance Company n/k/a Transamerica Life

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Insurance Company (“Transamerica”) moves to stay this case pending the resolution of the

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appeals in Farley v. Lincoln Benefit Life Co., No. 2:20-CV-02485-KJM-DB, 2023 WL 3007413

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(E.D. Cal. Apr. 18, 2023), appeal docketed, No. 23-80037 (9th Cir. May 3, 2023), and Small v.

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Allianz Life Ins. Co. of N. Am., No. CV2001944TJHKESX, 2023 WL 4042593 (C.D. Cal. May 23,

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2023), appeal docketed, No. 23-80050 (9th Cir. June 6, 2023). ECF No. 101 (“Mot.”). Plaintiff

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Dung Phan (“Phan”) filed an opposition to the motion. ECF No. 107 (“Opp.”). Transamerica

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filed a reply in support of its motion. ECF NO. 108 (“Reply”). The Court vacated the hearing on

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the motion, originally scheduled for February 15, 2024. ECF No. 105.
For the reasons discussed below, the Court GRANTS the motion to stay.

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I.

BACKGROUND
In 1998, Phan acquired a life insurance policy that is now administered by Transamerica.

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ECF No. 77 (“Amend. Compl.”) ¶ 29. In May of 2018, Phan missed a premium payment. On

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May 22, 2018, Transamerica sent Phan a “Grace Notice,” which required her to pay the premium

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or the policy would lapse. Id. ¶ 34. Phan did not pay in time, and the policy lapsed on July 23,

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2018. Id. On July 24, 2018, Transamerica sent Phan a “Lapse Notice,” informing Phan that her

United States District Court
Northern District of California

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policy was no longer in force. Id. Phan attempted to pay the premium amount on July 31, 2018.

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Id. Transamerica instead required Phan to apply for reinstatement of her policy. Phan applied, but

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Transamerica denied her application and returned her July 31, 2018 premium payment. Id. Phan

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filed this lawsuit on June 2, 2020. ECF No. 1. Her operative complaint alleges that Transamerica

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failed to comply with California Insurance Code §§ 10113.71 and 10113.72 (“the Statutes”) and

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brings claims for declaratory judgment, breach of contract, violations of the California Unfair

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Competition Law, and violations of California’s elder abuse statute. Amend. Compl. ¶¶ 55–99.

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On September 17, 2020, the Court stayed this case for one year pending decisions of the

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California Supreme Court in McHugh v. Protective Life Ins. Co., 12 Cal.5th 213 (2021), and the

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Ninth Circuit in Thomas v. State Farm Life Ins. Co., No. 20-55231, 2021 WL 4596286 (9th Cir.

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Oct. 6, 2021), and Bentley as trustee of 2001 Bentley Fam. Tr. v. United of Omaha Life Ins. Co.,

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No. 20-55435, 2022 WL 4377110 (9th Cir. Feb. 1, 2022). ECF No. 26. After the stay was lifted,

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Phan filed a motion to certify a class, ECF No. 57, which the Court denied without prejudice

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because the relief ultimately requested in Phan’s reply brief differed from her complaint and

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motion. ECF No. 72. Phan amended her complaint and filed a new motion to certify a class,

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defining the proposed class as follows:

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The Class:
All (1) owners, or (2) beneficiaries upon a death of the insured, of
Defendant’s individual life insurance policies issued in California
before 2013 that Defendant lapsed or terminated for the non-payment
of premium in or after 2013 without first complying with all the
requirements of Insurance Code Sections 10113.71 and 10113.72.
The Elder Abuse Sub-Class:
All members of the Class who were also 65 years of age or older at
the time their policy lapsed or terminated.
ECF No. 75 at 2. Phan’s class certification motion argues that certification is appropriate under

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Fed. R. Civ. P. 23(b)(2) and (b)(3). Id. at 10.
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Since the California Supreme Court decided McHugh, federal district courts in the Ninth
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Circuit have considered and come to different conclusions regarding the question of whether a
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plaintiff may certify a class of individuals for whom an insurance company failed to comply with
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the Statutes when terminating the individuals’ life insurance plans for nonpayment of premiums.

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See, e.g., Moreland v. Prudential Ins. Co. of Am., No. 20-CV-04336-RS, 2023 WL 6450421, at *6

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(N.D. Cal. Sept. 29, 2023) (denying class certification); Poe v. Nw. Mut. Life Ins. Co., No. 8:21-

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CV-02065-SPG-E, 2023 WL 5251875, at *9 (C.D. Cal. Aug. 14, 2023) (denying class

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certification); Steen v. Am. Nat’l Ins. Co., No. 220CV11226ODWSKX, 2023 WL 4004192, at *14

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(C.D. Cal. June 14, 2023) (denying class certification); Small, 2023 WL 4042593, at *4 (granting

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class certification under Rule 23(b)(2) and (b)(3)); Farley, 2023 WL 3007413, at *9 (granting

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class certification under Rule 23(b)(2)); Nieves v. United of Omaha Life Ins. Co., No. 21-CV-

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01415-H-KSC, 2023 WL 2705836, at *9 (S.D. Cal. Mar. 28, 2023) (denying class certification);

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Siino v. Foresters Life Ins. & Annuity Co., 340 F.R.D. 157, 167 (N.D. Cal. 2022) (denying class

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United States District Court
Northern District of California

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certification).
The Ninth Circuit granted permission to appeal orders in two cases that granted class

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certification under Fed. R. Civ. P. 23(f). In Farley, the district court considered a proposed class

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definition with nearly identical wording to the one that Phan proposes in her motion. Compare

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Farley, 2023 WL 3007413, at *2, with ECF No. 75 at 2. The district court certified the class

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under Rule 23(b)(2), finding that declaratory relief “invalidating the lapse and/or termination of

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insurance policies without the provision of the safeguards mandated by the [S]tatutes would serve

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a useful purpose in clarifying and settling the legal relations between plaintiff, the putative class

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members and defendant.” Farley, 2023 WL 3007413, at *8. However, the district court denied

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certification under Rule 23(b)(3), finding that the plaintiff was not an adequate class representative

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because she was not seeking monetary relief. Id. at *9. Similarly, in Small, the district court

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considered a proposed class definition with nearly identical wording to the one that Phan proposes

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in her motion. Compare Small, 2023 WL 4042593, at *1, with ECF No. 75 at 2. The district court

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certified a class under Rule 23(b)(2) and (b)(3), finding that “[t]he central issue . . . is whether [the

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insurance company] had a corporate policy to terminate life insurance policies for non-payment of

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premiums without first complying with the Statutes. Small, 2023 WL 4042593, at *4.

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Transamerica requests that the Court stay this case pending the Ninth Circuit’s resolution
of the appeals in cases. Mot. at 2–3.

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II.

LEGAL STANDARD
District courts have the “discretionary power to stay proceedings.” Lockyer v. Mirant

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Corp., 398 F.3d 1098, 1109 (9th Cir. 2005) (citing Landis v. No. American Co., 299 U.S. 248, 254
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(1936)). This power is “incidental to the power inherent in every court to control the disposition
of the cases on its docket with economy of time and effort for itself, for counsel, and for litigants.”
Landis, 299 U.S. at 254. The court may “find it is efficient for its own docket and the fairest

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course for the parties to enter a stay of an action before it, pending resolution of independent
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proceedings which bear upon the case.” Dependable Highway Exp., Inc. v. Navigators Ins. Co.,

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498 F.3d 1059, 1066 (9th Cir. 2007) (quoting Levya v. Certified Grocers of Cal., Ltd., 593 F.2d
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863–64 (9th Cir. 1979)). “This rule applies whether the separate proceedings are judicial,

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administrative, or arbitral in character, and does not require that the issues in such proceedings are
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United States District Court
Northern District of California

necessarily controlling of the action before the court.” Leyva, 593 F.2d at 863–64.
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In determining whether to grant a stay, “the competing interests which will be affected by
the granting or refusal to grant a stay must be weighed.” CMAX, Inc. v. Hall, 300 F.2d 265, 268
(9th Cir. 1962) (citing Landis, 299 U.S. at 254-55). “Among these competing interests are [1] the

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possible damage which may result from the granting of a stay, [2] the hardship or inequity which a
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party may suffer in being required to go forward, and [3] the orderly course of justice measured in
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terms of the simplifying or complicating of issues, proof, and questions of law which could be
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expected to result from a stay.” Id. In addition, the “proponent of a stay bears the burden of
establishing its need.” Clinton v. Jones, 520 U.S. 681, 708 (1997) (citing Landis, 299 U.S. at
255). If there is “even a fair possibility” of harm to the opposing party, the moving party “must
make out a clear case of hardship or inequity in being required to go forward.” Landis, 299 U.S.

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at 255.
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III.

DISCUSSION
The Court will exercise its broad discretion to manage its docket and grant a one year stay

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in the name of judicial efficiency. If at that time, the Ninth Circuit has not provided guidance in
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Farley or Small, Transamerica may request an extension. The stay is issued for the following
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reasons.
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A.

Factors One and Two: Damage and Hardship to Parties

Transamerica argues that the putative class will not be harmed because living policy
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owners are not entitled to monetary relief; to the extent that Phan seeks monetary relief for the
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class, that relief is not sufficient to warrant denying a stay; and to the extent that Phan seeks
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declaratory or injunctive relief, she has not sought a temporary restraining order or a preliminary
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injunction. Mot. at 6–7. Transamerica also argues that the case is relatively young, the stay will
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likely be resolved within a year, and it is likely that the other similar cases in the Ninth Circuit will
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be stayed as well. Id. at 7–8. Finally, Transamerica argues that it would suffer harm without a
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stay because if the Court certifies a class, then the parties will have to conduct merits discovery on
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a class-wide basis which might be obviated by a decision in Farley or Small. Id. at 8–9.
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Phan responds that the putative class would be harmed by the stay because they would be
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United States District Court
Northern District of California

forced to wait for relief, many of the class members are elderly, and this action serves the public
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interest because it seeks to enforce important provisions of the California Insurance Code. Opp. at
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4–5, 8. Phan also argues that being forced to defend a lawsuit is not sufficient hardship to justify a
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stay and the bulk of discovery has already been completed. Id. at 5–6. Finally, Phan argues that
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Transamerica failed to discuss a “likelihood of success” factor. See id. at 7–8 (citing Nken v.

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Holder, 556 U.S. 418 (2009)).
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The Court finds that the first and second CMAX factors weigh in favor of a stay. First,
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Phan and the putative class will not be harmed by a stay because the declaratory relief that Phan
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seeks on behalf of the class would be the same and have the same effect if awarded now or in a
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year. To the extent that Phan requests monetary relief on behalf of the class, “the Ninth Circuit
has made clear that monetary recovery cannot serve as the foundation for the denial of a stay.”

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Robledo v. Randstad US, L.P., No. 17-CV-01003-BLF, 2017 WL 4934205, at *3 (N.D. Cal. Nov.
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1, 2017) (citing Lockyer v. Mirant Corp., 398 F.3d 1098, 1110 (9th Cir. 2005)). Second, both
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parties and the Court would be harmed if the stay is denied. By June 2024, the parties are to
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complete expert discovery, brief dispositive motions, and go to trial. Should the Court deny a stay
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and certify a class, the parties would devote significant resources to litigating a class action only to
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have their efforts potentially rendered moot and unnecessary by a decision in either Farley or
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Small. Indeed, both parties and the Court would benefit from further guidance from the Ninth

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Circuit as this case moves forward.

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Finally, the Court again declines Phan’s invitation to add a factor to the CMAX balancing

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test. As the Court noted in its previous stay order, Phan relies on inapposite authority to support

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her argument that the Court must consider the “likelihood of success.” See ECF No. 24 (rejecting

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Phan’s reliance on Nken v. Holder, 556 U.S. 418 (2009) because Nken differs from this case in

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both subject matter and procedural posture).

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United States District Court
Northern District of California

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The Court acknowledges Phan’s desire to avoid a multi-year indefinite stay. The Court
imposes a definite period for the stay—12 months. If there is no resolution in either Farley or
Small at that time, the stay may be extended for a similarly definite period.

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B.

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Transamerica argues that a stay would conserve judicial resources because Farley and

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Small raise the same issues as in this case and a decision from the Ninth Circuit in either case

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would at minimum provide guidance and at best provide binding authority which the Court should

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consider in this case. Mot. at 10. Phan argues that the proposed stay has too many

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“contingencies” and Farley and Small will only provide guidance to the Court’s consideration of

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class certification issues. Opp. at 6–7.

Factor Three: The Orderly Course of Justice

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The Court finds that this factor weighs heavily in favor of a stay. “In determining whether

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the third factor weighs in favor of a stay, considerations of judicial economy are highly relevant.”

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Fuller v. Amerigas Propane, Inc., No. 09-2616 TEH, 2009 WL 2390358, at *2 (N.D. Cal. Aug. 3,

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2009) (holding that defendant’s arguments showing judicial economy would be served by the

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stay). The Court is unpersuaded by Phan’s argument that the Court should deny a stay because

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Farley and Small might only provide guidance on the class certification issues. Even if the class

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certification issues will not be automatically won or lost after the resolution of Farley or Small,

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major issues in this case will be clarified by a ruling in even one of those cases. In fact, it is

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highly likely that the Court’s decision on class certification will be simplified by a decision in one

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or both of those cases because they use nearly identical class definitions and the parties raise

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substantially similar arguments to the definition and arguments at issue in this case. Moreover,
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should the Court rule on class certification in a way that conflicts with the decisions in Farley or

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Small, the Court would need to reconsider its ruling in light of decisions in those cases.

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Accordingly, the Court finds this stay of a finite duration is the most efficient and fair way to

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handle the litigation of this case.

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IV.

United States District Court
Northern District of California

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ORDER
For the foregoing reasons, the Court GRANTS Defendant Transamerica Life Insurance

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Company’s Motion to Stay This Action. ECF No. 101. This case is stayed until November 14,

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2024. The parties are to submit a joint status report to the Court within 14 days of the resolution

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of Farley or Small or on November 14, 2024, whichever is earlier.

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Under these circumstances, the Court finds it appropriate to terminate the pending motion

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for class certification (ECF No. 75) without prejudice to Phan. Once the stay is lifted, Phan may

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either rewrite the motion consistent with Ninth Circuit precedent or resubmit the motion

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previously presented.

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IT IS SO ORDERED.

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Dated: November 13, 2023
______________________________________
BETH LABSON FREEMAN
United States District Judge

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