Free Reply to Response to Motion - District Court of Colorado - Colorado

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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLORADO Civil Action No. 00-cv-01841-LTB-PAC RICKY EUGENE CLARK, on behalf of himself and all others similarly situated, Plaintiff, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, an Illinois corporation, Defendant.

STATE FARM' REPLY IN SUPPORT OF ITS S MOTION FOR ENTRY OF A SCHEDULING ORDER

Defendant State Farm Mutual Automobile Insurance Company (" State Farm" submits ) the following reply in support of its Motion for Entry of a Scheduling Order, filed May 18, 2007. INTRODUCTION After first opposing the Motion for Entry of a Scheduling Order, Plaintiff Clark and Proposed Intervenors McIntosh, Reed, and Hobza now agree with many aspects of the scheduling order proposed by State Farm. Their objections, mainly to the length and scope of discovery needed in advance of the hearing, are not reasonable. Accordingly, State Farm

respectfully requests that the Court enter a scheduling order containing the terms suggested in its Motion, with one modification to the briefing schedule on the Motion for Class Certification, as explained below.

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ARGUMENT A. An evidentiary hearing on the Motion for Class Certification is both permissible and appropriate in this case. On September 27, 2006, Clark requested that the Court set a hearing on the Motion for Class Certification in this case. See Plaintiff' Case Management Proposal for Further s

Proceedings in Connection with the Status Hearing Set for September 28, 2006 (Sept. 27, 2006) (Docket No. 181) at 2, ¶ 5. Evidentiary hearings are routinely held on motions for class

certification, and such a hearing is essential and would assist the Court in this case. As an initial matter, Plaintiff incorrectly argues that no evidentiary hearing should be permitted because of the " general impropriety of evidentiary hearings" in the context of class certification. There is, however, no prohibition against the Court hearing factual evidence

relevant to the legal issues presented by the Motion for Class Certification. Indeed, the trend in modern cases is to recognize that a district court considering a motion for class certification must resolve factual disputes relevant to each Rule 23 requirement. For example, the Second Circuit recently reviewed the voluminous case law regarding the extent to which a district court can or should delve into factual issues in ruling on a motion for class certification, and concluded that: (1) (2) a district judge may certify a class only after making determinations that each of the Rule 23 requirements has been met; such determinations can be made only if the judge resolves factual disputes relevant to each Rule 23 requirement and finds that whatever underlying facts are relevant to a particular Rule 23 requirement have been established and is persuaded to rule, based on the relevant facts and the applicable legal standard, that the requirement is met; the obligation to make such determinations is not lessened by overlap between a Rule 23 requirement and a merits issue, even a merits issue that is identical with a Rule 23 requirement;

(3)

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in making such determinations, a district judge should not assess any aspect of the merits unrelated to a Rule 23 requirement; and a district judge has ample discretion to circumscribe both the extent of discovery concerning Rule 23 requirements and the extent of a hearing to determine whether such requirements are met in order to assure that a class certification motion does not become a pretext for a partial trial of the merits.

In re Initial Pub. Offering Secs. Litig., 471 F.3d 24, 42 (2d Cir. 2006) (emphases added). Similarly, the Fifth Circuit has held: Recognizing the important due process concerns of both plaintiffs and defendants inherent in the certification decision, the Supreme Court requires district courts to conduct a rigorous analysis of Rule 23 prerequisites. District courts are required to take a " close look" at the parties'claims and evidence in making its [sic] Rule 23 decision. Class certification hearings should not be minitrials on the merits of the class or individual claims. At the same time, however, " going beyond the pleadings is necessary, as a court must understand the claims, defenses, relevant facts, and applicable substantive law in order to make a meaningful determination of the certification issues." To assist the court in this process it may sanction controlled discovery at the certification stage. The plain text of Rule 23 requires the court to " find,"not merely assume, the facts favoring class certification. Unger v. Amedisys, Inc., 401 F.3d 316, 320-21 (5th Cir. 2005) (citations omitted). Although the Tenth Circuit has not yet spoken in detail to this issue, a recent decision from the District of New Mexico contains a detailed analysis of why the Tenth Circuit, too, is likely to conclude that " the court may go beyond the pleadings and consider legal and factual issues related to the merits if necessary to determine whether each Rule 23 requirement has been met." Mulford v. Altria Group, Inc., 2007 U.S. Dist. LEXIS 29149, *6 (D.N.M. Mar. 22, 2007), attached as Exh. A. The New Mexico court explained: In J.B. ex rel. Hart v. Valdez, 186 F.3d 1280 (10th Cir. 1999), the Tenth Circuit, in a footnote and without any analysis, stated that " when deciding a motion for class certification, the district court should accept the allegations contained in the complaint as true. However, it need not blindly rely on

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conclusory allegations which parrot Rule 23 requirements [and] may . . . consider the legal and factual issues presented by plaintiff' complaints." (internal cites s and quotes omitted). Id. at 1290 n.7. The Court interprets this statement as permitting a district court to consider matters beyond the pleadings, including matters that touch upon the merits, if necessary to ensure that the requirements of Rule 23 are satisfied. This interpretation is consistent with other Tenth Circuit cases recognizing that ensuring that the Rule 23 requirements are met may require a court to consider matters beyond the pleadings. ... Furthermore, this interpretation is consistent with the position of the overwhelming majority of other circuits and the Supreme Court, which have held that a district court is not limited to the allegations raised in the complaint, and should instead make whatever legal and factual inquiries are necessary to make an informed determination of the certification issues. Mulford, 2007 U.S. Dist. LEXIS 29149, *6 n.2 (alterations in original) (citing In re Initial Pub. Offering Secs. Litig. and Unger, among others). Thus, this Court is permitted ­ and indeed required ­ to resolve factual issues relevant to the Rule 23 considerations. An evidentiary hearing is both appropriate and necessary in order for the Court to take evidence on disputed factual issues and to fulfill its obligations under Rule 23. In addition to the fact that evidentiary hearings clearly are permitted, such a hearing would assist the Court in this case. As State Farm indicated in its Motion for Entry of a Scheduling Order, it has undertaken a voluntary program of paying additional PIP benefits to certain of its pedestrian insureds. This voluntary effort by State Farm is relevant, at a minimum, to issues of numerosity and typicality under Rule 23(a), and to the issue of predominance under Rule 23(b)(3). Moreover, Clark and State Farm disagree on the proper extent and significance of State Farm' payments to additional insureds, and those factual questions are best adjudicated as s part of an evidentiary hearing to the Court. While Clark believes that the voluntary program has no significant effect on numerosity, and relies on an affidavit of questionable merit from Mr.

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Strzelec, State Farm believes that its program could be relevant to all of the legal issues involved in deciding the Motion for Class Certification. An evidentiary hearing would give the Court the opportunity to explore and take into account the facts concerning State Farm' additional payments to pedestrian insureds, the s accuracy of and weight to be given to affidavits such as the one prepared by Mr. Strzelec, and how those facts bear on all of the issues properly considered under Rule 23(a). There may be other factual issues that arise during the course of briefing the Motion for Class Certification, but at a minimum, these issues warrant an evidentiary hearing. An evidentiary hearing is both permitted and appropriate in this case, and State Farm respectfully requests that the Court set one at a time convenient for its calendar. B. The times requested by State Farm are reasonable and realistic, and State Farm has no objection to the additional time requested by Plaintiff. Clark and the Proposed Intervenors agree that State Farm should not be required to respond to the Motion for Class Certification until after the Court has ruled on the Motion to Intervene. See Response at 1. They further agree that State Farm is entitled to take depositions of the Proposed Intervenors if the Motion to Intervene is granted. See id. The disagreements between the parties appear to be with respect to the length and scope of the discovery period and the precise briefing schedule. Because the time periods and schedule proposed by State Farm are both reasonable, State Farm requests that the Court adopt its proposals, with a single modification explained below. 1. Length and Scope of the Discovery Period

If the Motion to Intervene is granted, State Farm has proposed that it be given two months in which to complete written and deposition discovery regarding the Proposed

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Intervenors. Plaintiff and the Proposed Intervenors object both that State Farm does not need written discovery from the Proposed Intervenors, and also that two months is too long for the discovery period. State Farm is entitled to obtain written discovery from the Proposed Intervenors, should they be added as putative class representatives. Clark and the Proposed Intervenors offer no support for their argument that State Farm should be limited only to taking depositions of the Proposed Intervenors. Indeed, Rule 26 explains that " methods of discovery may be used in any sequence, and the fact that a party is conducting discovery, whether by deposition or otherwise, does not operate to delay any other party' discovery." Fed. R. Civ. P. 26(d). Similarly, State s Farm should not be limited to only one form of discovery ­depositions ­when Plaintiff and the Proposed Intervenors admit that some discovery is necessary and appropriate. Rather, State Farm should be permitted to take discovery in the manner and order it sees fit, so that it may properly address the suitability of the Proposed Intervenors as class representatives. Because there is no authority for Plaintiff' request that State Farm be limited to depositions alone, State s Farm respectfully requests that the Court permit both written and deposition discovery. In addition, State Farm has proposed a reasonably limited length of time for it to conduct discovery: two months. Plaintiff, however, would have State Farm conduct all of its discovery and prepare a response to the Motion for Class Certification within four weeks following an order granting the Motion to Intervene. That short time period simply is unrealistic and unfair because State Farm is entitled to and requires certain written and deposition discovery from the Proposed Intervenors if they are permitted to intervene. Once State Farm propounds its written discovery, the Proposed Intervenors would have 30 days to respond, see Fed. R. Civ. P. 33, 34 &

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36, thus exhausting the time proposed for State Farm to respond to the Motion for Class Certification. Further, the depositions of all three Proposed Intervenors will need to be

scheduled for dates after they have responded to the written discovery requests. This will require coordinating the schedules of all counsel, and the schedules of the three Proposed Intervenors. It is not unreasonable to expect that, taking into account counsel' other professional obligations, s and the uncertainty of the Proposed Intervenors'calendars, it could take up to another month to find workable deposition dates. Thus, a discovery period of two months is reasonable, if not ambitious. 2. Briefing Schedule

Plaintiff and the Proposed Intervenors next argue that, if the Motion to Intervene is granted, State Farm should not be given an additional 30 days after the close of discovery to prepare its Response to the Motion for Class Certification. Rather, they apparently would have State Farm draft its Response before it has conducted the discovery it needs in order to prepare the Response. This approach is unworkable. State Farm and its counsel will require a

reasonable amount of time after completing discovery to review all of the written discovery and deposition transcripts, conduct additional research, and prepare a considered Response to the Motion for Class Certification. Thirty days after the close of discovery is a reasonable, and realistic, amount of time to complete those tasks. If the Motion to Intervene is denied, Plaintiff and the Proposed Intervenors suggest that State Farm be given only two weeks to prepare and file its Response to the Motion for Class Certification. Again, this approach is unworkable. Without knowing when the Court will rule on the Motion to Intervene, counsel for State Farm are unable to anticipate potential conflicts

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with other litigation deadlines. In order to ensure that State Farm and its counsel have adequate time to prepare and file a Response to the Motion for Class Certification, State Farm requests a reasonable time period of 30 days after denial of the Motion to Intervene. In either case, Plaintiff and the Proposed Intervenors object to the time State Farm has suggested for their Reply Brief. They request three weeks, rather than 15 days, after State Farm files its Response to file their Reply. State Farm does not object to the three weeks they request, and proposes only that modification to the scheduling order it seeks. CONCLUSION State Farm has proposed a reasonable, orderly procedure for the next phases of this case. Plaintiff and the Proposed Intervenors do not object to the general concept of the scheduling order, or to some of the particulars outlined by State Farm. As explained above, the specific objections made by Plaintiff and the Proposed Intervenors are unreasonable. WHEREFORE, Defendant State Farm Mutual Automobile Insurance Company respectfully requests that the Court enter a Scheduling Order in this case as follows: (1) June 4, 2007; (2) rescheduling the briefing on Plaintiff' Motion for Class Certification until after s requiring State Farm to file its Response to the Motion to Intervene no later than

the Court' ruling on the Motion to Intervene; s (3) if the Motion to Intervene is denied, requiring State Farm to file its Response to

the Motion for Class Certification no later than 30 days after such denial, with Plaintiff' Reply s Brief to be filed 21 days thereafter;

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(4)

if the Motion to Intervene is granted in whole or in part, permitting the parties to

conduct limited discovery for two months, such discovery to include written discovery to the Intervenors and depositions of each of the Intervenors; (5) if the Motion to Intervene is granted in whole or in part, further requiring State

Farm to file its Response to the Motion for Class Certification no later than 30 days after the close of that limited discovery period, with Plaintiffs'Reply Brief to be filed 21 days thereafter; and (6) setting a two-day evidentiary hearing to be conducted at a time appropriate for the

Court' calendar, after the Motion for Class Certification is fully briefed. s Respectfully submitted this 5th day of June, 2007.

s/ Marie E. Williams Michael S. McCarthy Russell O. Stewart Marie E. Williams FAEGRE & BENSON LLP 1700 Lincoln Street, Suite 3200 Denver, Colorado 80203 Phone: (303) 607-3500 Fax: (303) 607-3600 E-mail: [email protected] [email protected] [email protected] ATTORNEYS FOR DEFENDANT STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY

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CERTIFICATE OF SERVICE I hereby certify that on this 5th day of June, 2007, I electronically filed the foregoing STATE FARM' REPLY IN SUPPORT OF ITS MOTION FOR ENTRY OF A S SCHEDULING ORDER with the Clerk of the Court using the CM/ECF system which will send notification of such filing to the following e-mail addresses:
· · ·

Robert Bruce Carey [email protected],[email protected] Leif Garrison [email protected],[email protected] L. Daniel Rector [email protected],[email protected]

s/ Colleen H. Russell Colleen H. Russell
fb.us.2080123.02

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