UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 C 12-02506 LB (ORDER) generated pagenumbers atthetopof the document. of theirform mortgage contractsbyU.S. Bank;(2)breachoftheimplied covenantofgoodfaithand Amended ClassActionComplaint (“SAC”),ECFNo. 169, ¶2. expense reimbursements anddiscountedadministrative insurancetrackingservices.Second Company (“ASIC”).TheyalsoallegethatU.S.Bankreceivedkickbacksfrom ASICintheform of flood insuranceontheirrealpropertythatwasunderwrittenbyAmerican SecurityInsurance ______/ SECURITY INSURANCECOMPANY, U.S. BANK,N.A.,andAMERICAN public, of theclassesandonbehalfgeneral SKELLEY, individuallyandasrepresentatives WEAVER, andLAWRENCE andDONENE STEPHEN ELLSWORTH, MARILYN Case 3:12-cv-02506-LBDocument250Filed06/13/14Page1of56 In thisputativeclassaction,Plaintiffschallenge 1 CitationsaretotheElectronic CaseFile(“ECF”)withpincitestotheelectronically- v.

Defendants. Plaintiffs, UNITED STATESDISTRICTCOURT Northern DistrictofCalifornia San FranciscoDivision INTRODUCTION U.S.Bank’spracticeofforce-placingbackdated [ECF Nos.190-4,195,and197] BACKDATING ON THEPLEADINGSREGARDING BANK’S MOTIONFORJUDGMENT JURISDICTION, ANDDENYINGU.S. LACK OFSUBJECT-MATTER BANK’S MOTIONTODISMISSFOR CERTIFICATION, DENYINGU.S. MOTION FORCLASS ORDER GRANTINGPLAINTIFFS’ No. C12-02506LB 1 Theyallegesixclaims: (1)breach UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 C 12-02506 LB (ORDER) discovered, (2)whennotice ofthelapsewasprovidedtoborrower,or (3)whethertherewasany and otherborrowersinthe eventofalapseincoveragewithoutregardto (1)whenthelapsewas U.S. BankandASICengagedinretroactivelyfo “qualified expensereimbursements” (“QERs”)andsubsidizedinsurancetrackingservices; (B) FPI processintwoways:(A)U.S.Bankreceived kickbacksfrom ASICintheform ofso-called borrower. property securingtheloanfallsinaSpecialFlood HazardArea(“SFHA”)andisnotinsuredbythe (“LPFI”). SAC¶1.Lendersgenerallyhavetherighttoforce-placefloodinsurancewhere This practiceiscalled“force-placedfloodinsurance”(“FPI”)or“lender-placed their residentialproperties,whichsecuremortgage loansU.S.Bankservices (andsometimes owns).. I. THELAWSUIT backdated coverage. recent amendment totheNationalFloodInsuranceActclarifiesthatborrowerscanbechargedfor California andNewMexico,italsomoved forjudgment onthepleadingsgroundthata subject matter jurisdictiononthegroundthatPlai the classessetforthatendoforder. See also proposethreeCaliforniaclassesandNew laws likeCalifornia’s,andonesubclassforstates two subclassestoaccountforvariationsinstatec of liability(twoonakickbacktheoryandonebackdatingtheory).Eachmulti-state classhas California BusinessandProfessionsCodesection17200 of U.S.BankandASICunderthelawsCaliforniaNewMexico;(5)-(6)violations fair dealingbyU.S.BankunderthelawsofCaliforniaandNewMexico;(3)-(4)unjustenrichment Motion,ECFNo.190-4.Forthereasonsstatedbelow,courtgrantsmotion andcertifies Case 3:12-cv-02506-LBDocument250Filed06/13/14Page2of56 Plaintiffs challengeU.S.Bank’spracticeofchargingthem forfloodinsurance itpurchasedfor After Plaintiffsfiledtheirclasscertification Plaintiffs move tocertify threemulti-state classesonthecontractclaims basedonthreetheories Id. ¶2.PlaintiffsallegethatU.S.BankandASICengaged inascheme tomanipulate the

See ECFNos.195,197.Thecourtdeniesbothmotions. STATEMENT motion, U.S.Bankmoved todismiss forlackof rce-placing floodinsurancecoverageonPlaintiffs ontract law:onesubclassforstateswithcontract ntiffs hadnostandingforstatesotherthan 2 with contractlawslikeNewMexico’s.Plaintiffs Mexico classesfortheotherstate-lawclaims. et seq. againstU.S.BankandASIC. Case 3:12-cv-02506-LB Document 250 Filed 06/13/14 Page 3 of 56 Case 3:12-cv-02506-LB Document 250 Filed 06/13/14 Page 4 of 56 UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 C 12-02506 LB (ORDER) and atwhateffectivedate, varieddependingonfactorssuchasthedateof theinadequacyof e.g, id letter” informing theborrowerthatU.S.Bankhadforce-placedfloodinsurancethrough ASIC. borrower failedtoprovideproofofadequateinsurance within45days,ASICsenta“placement Scherer Dep.,1stRichterDecl.Ex.2,ECFNo.139-7, 59:24-60:20,63:20-64:1. buyer toprovideproofofinsurancein45days “notice letter”onU.S.Bankletterhead,describingthefloodinsurancerequirement andtellingthe cycle” process. these policies,whenASIClearnedthataborrowerlackedadequatefloodinsurance,itbegan“letter Decl. Ex.1,ECFNo.139-4;SchererDep.55:1-3, (LPI) HazardOperationsU.S.BankProceduresManual”),14(same); Quist Dep.40:1-3,1stRichter placed insuranceprogram. contracts. Outsourcing Program). Theterms oftheMasterAgreement largelyincludetheterms oftheprior Insurance Administration Program), ScheduleNo.3(Hazard,Compliance andWind Plus Richter Decl.Ex.13,ECFNo.139-6; with variousschedulesthatsetforththecomponents ofASIC’sservices. charged forFloodLPIafterU.S.BankstoppedreceivingQERs. Weaver, andtheSkelleyswereallchargedsame rate,eventhoughWeaver andtheSkelleyswere As evidencethattheQERswerenottiedtofloodinsurance,U.S.BankpointsoutEllsworth, 2008 andwereterminated onDecember 1,2011.Wolfe Decl.Exs.5,15,ECF Nos.203-2,204-2. Droske Decl.Ex.8,ECFNo.201-4.U.S.Bankalso insurance program.” Wolfe Decl.,Exs.5-6,ECFNos.203-2,204-1; performed underthe‘Hazard.Administrative Agreement’” and“appliedsolelytothehazard connection withfloodinsuranceandinsteadtheyweretiedto“administrative andclericalservices Case 3:12-cv-02506-LBDocument250Filed06/13/14Page5of56 The notificationprocess wasuniform, buttheLPFI U.S. BankandASICdevelopeduniform policyandproceduremanuals toadminister theforced- In 2011,thepartiescombined thethreeagreements intooneMasterSupplierServiceAgreement . at64:2-18.ASICfollowedthisprocedureforall U.S.Bankborrowers. See Wolfe Dep.76:8-14,1stRichterDecl.Ex.4,ECFNo.139-10. See

1stRichterDecl.Ex.14,ECFNo.137-7at14. See 1stRichterDecl.,ECFNo.119-1Exs.7(“LenderPlacedInsurance see, e.g.,id. orU.S.Bankwouldforce-placecoverage. 5 atScheduleNo.2(governingCompliance PLUS 1st RichterDecl.Ex.2,ECFNo.139-7.Under pointsoutthattheseQERsbeganonJanuary1, policiesaboutwhentoforce-place coverage, First see Wolfe Dep.47:3-48:6, , ASICsenttheborrowera See MasterAgreement, 1st Id. Second at61:11-16. , if the See See, UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 C 12-02506 LB (ORDER) 15 daysafterthe45-day noticeperiodtocomplete theprocessing. days may lapsebecauseiffloodinsurancelapses,itsometimes takesU.S.BankandASICmore than the insuredproperty,andbuyerdoesnotprovide thatconsent because theinsurancecompany requirestheborrower’sconsenttolistU.S.Bankasalienholderfor unable toreceivenotice”ofcancellationthebuyer’s floodinsurance,whichgenerallyhappens When apolicyisretroactivelyeffectivemore than60days,itiscommonly becauseU.S.Bank“is ECF No.206,¶8.Apolicythatisretroactivemore than60days istheexceptiontorule. than 45to60daysbeforethedatethatpropertyisselectedforlenderplacement. Wolfe Decl., his orhervoluntaryinsurancetolapse. ASIC. rights. The earliesteffective datefor theLPFIpolicyisdateU.S.Bankacquiredloanorservicing its servicingrights,ithasCoreLogic,athird-partyvendor,checkthefloodzonestatus. expires. LPFI lettercyclebegins,andanypolicyiseffectivethedayafter45-daynoticeperiod second floodzonedetermination ismade tobesurethatthestructureisinaSFHA,andifitis, so constructionloansaretreateddifferently. the 45-daynoticeperiodexpired. SFHA, butlaterwasbasedonaFEMAmap amendment, theLPFIpolicywaseffectivedayafter effective thedayafter45-daynoticeperiodexpired. flood insurancewithaninadequatecoverageamount, asupplementary LPFIpolicywasissued cancelled, theLPFIpolicywaseffectiveondateoflapseorcancellation. inadequacy. property inanSFHAneverhadfloodinsurance,theLPFIpolicywaseffectiveoninitialdateof flood insuranceoritslapse. Case 3:12-cv-02506-LBDocument250Filed06/13/14Page6of56 According toU.S.Bank,itgenerallydoesnotlender-placeinsurancewithaneffectivedatemore Regardless oftheissuancedateLPIpolicy, Another iterationofthepolicyisthatwhenU.S.Bankfirstacquiresanexistingmortgage loanor Id. Id. Id.

Also,U.S.BancorpServiceProviders,LLCsendstheletters,notBankthrough Id. ¶7.Ifaborrowerhadanexistingfloodinsurancepolicythatlapsedorwas

See Wolfe Decl.,ECFNo.206,¶6.Forexample, ifaborrowerwith Id. Floodinsuranceisrequiredonlyforimproved realproperty, See Wolfe Decl.Ex.2,ECFNo.202- 2at20. Id. ¶ 6 9. When thestructure’sfootingsareinplace,a it iseffective asof thedateaborrowerpermits Id. If thepropertyinitiallywasnotinan Id. Id. Plaintiffsdisputethattheir Alternatively, more than 60 Id. Iftheborrowerhad Id. ¶13. Id.

UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 C 12-02506 LB (ORDER) 1st Weaver Decl.,¶¶8-9,Ex.A,ECFNo.148-16-148-17. ¶¶ 3-4,Ex.1,ECFNo.119-8-119-9;DoneneSkelleyDecl.8-9,A,148-5148-6; place floodinsuranceiftheborrowerfailedtomaintain requiredcoverage. Uniform Instruments withthefollowingstandarduniform covenantsthatallowU.S.Banktoforce- or servicedbyU.S.Bank,andallweresecured Donene SkelleyliveinNewMexico.Allplaintiffs III. PLAINTIFFSANDTHEIRFORCE-PLACEDINSURANCE No. 190-4at21. were returnedtoborrowers,andASICretainedtherestorkickeditbackU.S.Bank.Motion,ECF Richter Decl.Ex.15,ECFNo.137-9at30.Theamounts showthatlessthan20%ofthepremiums ASIC’s dataregardingthepremiums andlossesonforce-placedfloodinsurancein20102011. Decl. Ex.2,ECFNo.119-10at3(U.S.Bank’sform at 20(citationsomitted). Defendants issueinsurancecoverage“wellafterthepurportedlapse.” experiences areexceptionalandassertthatinmany cases,suchastheSkelleysandEllsworth, Case 3:12-cv-02506-LBDocument250Filed06/13/14Page7of56 that thecostofinsurance coveragesoobtainedmight significantly exceedthecostof provide greaterorlesser coveragethanwaspreviouslyineffect.Borrower acknowledges Property, orthecontents oftheProperty,againstanyrisk,hazardorliability andmight shall coverLender,butmight ormight notprotectBorrower,Borrower’s equityinthe obligation topurchaseanyparticulartypeoramount ofcoverage. Therefore,suchcoverage insurance coverage,atLender’soptionandBorrower’s expense.Lenderisunderno If Borrowerfailstomaintain anyofthecoveragesdescribedabove,Lendermay obtain or certification. time remappings or similar chargesoccurwhichreasonablymight affectsuchdetermination charge forfloodzonedetermination andcertificationservicessubsequentchargeseach charge forfloodzonedetermination, certification andtrackingservices;or(b)aone-time Lender may requireBorrower topay,inconnectionwiththisLoan,either:(a)aone-time right todisapproveBorrower’schoice,which insurance carrierprovidingtheshallbechosenbyBorrowersubjecttoLender’s requires pursuanttotheprecedingsentencescanchangeduringterm oftheLoan.The amounts (includingdeductiblelevels)andfortheperiodsthatLenderrequires.What Lender floods, forwhichLenderrequiresInsurance.ThisInsuranceshallbemaintained inthe “extended coverage,”andanyotherhazardsincluding,butnotlimited to,earthquakesand erected onthePropertyinsuredagainstlossbyfire,hazardsincludedwithinterm 5. PropertyInsurance. Plaintiffs StephenEllsworthandMarilynWeaver The policiestypicallyaremore expensivethannon-force-placed coverage.

Borrower shallkeeptheimprovements nowexisting orhereafter by standardSingleFamily FannieMae/FreddieMac right shallnotbeexercisedunreasonably. 7 hadresidentialmortgage loansthatwereowned letter concedingthispoint).Plaintiffscite live inCalifornia,andPlaintiffsLawrence See Motion, ECFNo.190-4 See EllsworthDecl. See, e.g., Ellsworth UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 lender-in-interest, andit services Ellsworth’sloanthroughitsU.S.Bank Home Mortgagedivision. See ¶¶ 3-13,Ex.1.Hisloanoriginallywasaconstruction loanandthenwasconvertedtoahome loan. serviced byU.S.Bankatalltimes. them. EllsworthDecl.¶8,Ex.2;DoneneSkelley20,C;1stWeaver Decl.¶16,Ex.F. coverage, andallcostswerechargedtotheirescrowaccountssothattheyhadnochoicebutpay had insuranceforce-placedontheirresidentialproperties,allwerecharged90centsper$100of See this explanationatelephonenumber foraninsuranceagentwhocouldprovideadequatecoverage). could bemore expensivethantheinsurancetheycouldpurchaseontheir own(andincludedwith the FPI[whichwasspecified]thenwouldbeaddedtotheirescrowaccount,and(E)thisinsurance days wouldresultintheconversionoftemporary policytoafull-yearpolicy,(D)thechargefor required topurchasefloodinsurance,(C)afailure explained that(A)theirpropertieswereinanSFHA(asdetermined byFEMA),(B)theywere Lender DuetoCancellation,Expiration,orMissingPolicyInformation” (describedabove),which Donene SkelleyDecl.¶9;Weaver Decl.¶9. were notrequiredtoobtainfloodinsuranceasaconditionoftheirloans.EllsworthDecl.¶4; Id. C 12-02506 LB (ORDER) Atthetime thattheytookouttheirloans,Plaintiffsdidnotmaintain floodinsurance,andthey Wolfe Decl.,ECFNo.206,¶18;Wolfe Dep.36:12-37:14, ECFNo.139-10.U.S.Bankisthe Case 3:12-cv-02506-LBDocument250Filed06/13/14Page8of56 Ellsworth obtainedhis$393,892mortgage onJuly2,2007,and itoriginatedwithandwas A. StephenEllsworth The followingsectionshaveadditional All PlaintiffsreceivedU.S.Bank’sform “N and/or repairingtheProperty. Instrument, includingprotectingand/orasse appropriate toprotectLender’sinterestinthePropertyandrightsunderthisSecurity Security Instrument, .thenLendermay doandpayforwhatever isreasonableor Instrument. 9. ProtectionofLender’sInterestinthe payable, withsuchinterest,uponnoticefrom LendertoBorrowerrequestingpayment. These amounts shallbearinterestattheNoteratefrom thedateofdisbursement andshallbe Section 5shallbecome additionaldebtofBorrowersecuredbythisSecurityInstrument. insurance thatBorrowercouldhaveobtained.Anyamounts disbursedbyLenderunderthis Ellsworth Decl.¶4,Ex.2;DoneneSkelley12,C;1stWeaver Decl.¶12,Ex.C.All If(a)Borrowerfailstoperform thecovenantsandagreements containedinthis

See SAC, ECFNo.169,¶¶8,18,Ex.1at3-4;Ellsworth Decl. facts abouttheindividualplaintiffs. Property andRightsUnderthisSecurity otice ofTemporary FloodInsurancePlacedby ssing thevalueofProperty,andsecuring 8 provideproofofadequateinsurancewithin45 UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 policy effectiveJuly27, 2012. C 12-02506 LB (ORDER) would closeonAugust31,2012. and faxthatshewouldnotneedfloodinsurance because thepropertyhadbeensoldandescrow the salepapersonJuly16,2012. have floodinsurance. sold toFreddieMac,andthenewservicerofherloanwasU.S.Bank. After closing,byletterdatedNovember 2,2011,FreddieMacnotifiedherthatloanhadbeen or damages soughtinthislitigation. the rateapplicabletomortgage loan),anddidnotreimburse anycosts,expenses,attorney’sfees, certification, U.S.Bankreimbursed theFPIcharge,paidaninterestrateoflessthan1%(instead but receivednoresponse. Id. policy) provided$250,000infloodinsurancecoverage,butitwasnotbackdatedandcostonly$276. Farm effectiveSeptember 1,2010. Ex. 4at2.InAugust2010,Ellsworthpurchasedaone-yearfloodinsurancepolicythroughState 18, 2010and“backdated”itsothatwaseffectivefrom July3,2009to2010. Bank sentitssecondnoticeandforce-placedanASICinsurancepolicyfor$2,250issuedonAugust Ellsworth wasrequiredtohavefloodinsurance. FEMA establishingthathishome isnotinanSFHA. that Ellsworthwasrequiredtoobtainfloodinsurance,heobtainedaletterofmap amendment from him tocarryfloodinsurance.SAC,ECFNo.169at5n.2.Atsome pointafterU.S.Bankclaimed Wolfe Decl.

Case 3:12-cv-02506-LBDocument250Filed06/13/14Page9of56 On August13,2012,U.S. Banksentitssecondnoticethatithadforce-placed anASICinsurance On August28,2011,Weaver obtainedher$435,000mortgage from FirstNationsHome Finance. B. PlaintiffMarilynWeaver On April9,2012,EllsworthsentalettertoU.S.Bankrequestingrefundofthechargeshepaid On June9,2010,U.S.BanksentEllsworththenotice(describedinprevioussection)that On oraboutJune11,2012,U.S.BanksentWeaver itsstandardnoticethatshewasrequiredto

¶ 19.When Ellsworthenteredintothemortgage agreement, U.S.Bankdidnotrequire

Id. ¶ 33,Ex.9.OnJuly3,2012,Weaver soldtheproperty,andshefinalized See id. Id. ¶29,Ex.6at2.AfterEllsworthfiledhismotion forclass Id. Id ¶35,Ex.11,ECFNo.169-11 at2.OnAugust21,2012,Weaver See . ¶34,Ex.10at2-3. See id. ¶ 34.OnJuly18,2012,Weaver notifiedU.S. Bankbyletter

id. ¶ 28,Ex.5,ECFNo.169-5.Thispolicy(liketheASIC ¶27. Id. 9 ¶23,Ex.2at3.OnAugust18,2010,U.S. Id.

Id. ¶30,Ex.7at2. Id. ¶¶24-25, UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 C 12-02506 LB (ORDER) its recordsshowed“alapse ofinsurancecoveragefrom 06/01/11to03/05/12.” required floodinsurance. March 5,2012,U.S.Banksaidthattheproperty was nolongerinafloodzone,andit not availableorrequired. that showedtheSkelleys’home wasnotlocatedinanSFHAandthatfloodinsurance thuswas (February 20,2012noticeanddeclarationsshowing thesame coverageandeffectivedate). amount of$86,461,anda$778annualpremium. insurance bindershowedtheASIC-issuedpolicyw insurance policywithaneffectivedateofJune1,2011. Skelleys wererequiredtobuyfloodinsuranceandthatithadplacedatemporary ASIC-issuedflood mortgage hadbeenassignedtoU.S.BankeffectiveFebruary3,2011. flood insuranceontheirproperty. mortgage loan,theSkelleys’home wasnotlocatedinanSFHA,andtheywererequiredtocarry mortgage from Firstbank. Id a partialrefundofthe$2,250thatshe Ex. 15at2.OnoraboutSeptember 22,2012,Weaver receivedacheckintheamount of$2,041for insurance coverageonherpropertyhadbeenpartiallycancelledeffectiveAugust30,2012. Id. made severalattempts tocontactU.S.Bankaskaboutcancelingtheforce-placedfloodinsurance. $2,250. insurance withaneffectivedateofJuly27,2012,coverage$250,000,andannualpremium of received thebinderwithdeclarationspageshowingASIC-issuedforce-placedflood . ¶39,Ex.16at2. ¶38,Ex.14at2.OnSeptember 11,2012,U.S.BanksentWeaver aletterstatingthatthe Case 3:12-cv-02506-LBDocument250Filed06/13/14Page10of56 On February21,2012,theSkelleys’insuranceagent sentU.S.Bankaflood-zonedetermination On oraboutFebruary21,2002,PlaintiffsLa C. PlaintiffsLawrence andDoneneSkelley Weaver signedthefinalpapersforsaleofherhouseonAugust29,2012. On December 12,2011,U.S.Banksentthestandardform notice(describedabove)thatthe Id . ¶36,Ex.12at2-3.

Id Id. Id. . ¶46,Ex.22,ECFNo.169-22 at2.Itsentanotherletterthatday ¶45,Ex.21at3(effectivedateonmap was October6,2010).On ¶

40, Ex.17,ECFNo.169-17at2.When theyclosedontheir Id.

¶41.OnSeptember 7,2011,theyreceivedanoticethattheir initially paidfortheforce-placedfloodinsurancecoverage. wrence andDoneneSkelleyobtainedtheir$100,000 10 Id. ith aneffectivedateofJune1,2011,acoverage ¶43,Ex.19at3; Id. ¶43,Ex.19at2.Theattached Id. see

¶ 42,Ex.18at2-3. id. ¶ 44,Ex.20at3 Id Id. ., Ex.23,ECFNo. ¶37.Weaver Id. ¶ 38, UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 C 12-02506 LB (ORDER) words “intheordinarycourse ofbusiness.” lieu offoreclosure.”Intheirreplybrief,Plainti through abankruptcy,foreclosurejudgment, loanm “persons whoseforce-placedfloodinsurancecharges werecompletely refundedorextinguished judicial officer.”Motion,ECFNo.190-4at2n.1. employees; or(2)anyjudicialofficerassignedto backdating class.Motion,ECFNo.190-4at5-7. New Mexicolawbasedonthesame threetheories:alender-placedclass,QERand exclude loans“merely servicedbythebank.”Reply,ECFNo.222-4at7. proposed classdefinitionforallcontractclaims Mexico’s contractlaw(Skelleysubclasses). contract law(Ellsworth/Weaver subclasses),andone 190-4 at2-4.Eachclasshastwosubclasses:onefor challenge theallegedkickbacks,andthirdchallengesbackdating.Motion,ECFNo. following threetheories:alender-placedclass,QERandbackdatingclass.Thefirsttwo seq. Bank andASIC;(5)-(6)violationsofCalif covenant ofgoodfaithandfairdealingagainstU.S.Bank;(3)-(4)unjustenrichment againstU.S. IV. PROPOSEDCLASSDEFINITIONS zone determination onJuly5,2012. ¶ 47,Ex.24,ECFNo.169-24at2.Itmaintained that positionafterMs.Skelleyfaxedanotherflood partial refundof$187,andretain$591forthecoverageitprovidedthroughtermination date. 169-23 at2.OnMarch12,2012,U.S.Banksaidthatitwouldcancelthefloodinsurance,issuea Case 3:12-cv-02506-LBDocument250Filed06/13/14Page11of56 The followingchartsummarizes theproposedclassesbyclaim, andtheproposedclass The classesdonotinclude“(1)Defendants’ag Plaintiffs alsoproposeseparateclassesforthe Plaintiffs statesixclaims intheSAC:(1)breach Plaintiffs proposethreemulti-state classesforthebr againstU.S.BankandASIC.

See Id

id. . ¶¶48-49,Exs.25-26. , ¶¶86-130.Theyproposemulti-state andstateclasses. See Id. ornia Business&ProfessionsCodesection17200 toincludeonlyloansownedbyU.S.Bankand ffs refinethelimitation aboutrefundstoincludethe Reply, ECFNo.222-4at 7. In theirreplybrief,Plaintiffsagreedtonarrowthe 11 this caseoranyimmediate family member ofsuch non-contract state-lawclaims under Californiaand ents, boardmembers, directors,officers,or Also, allclasseshavealimitation thatexcludes odification, forbearance,shortsale,ordeed-in- of contractagainstU.S.Bank;(2)breachthe states withcontractlawssimilar to California’s for stateswithcontractlawssimilar toNew each ofcontractclaim, oneforeachofthe et Id . UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 C 12-02506 LB (ORDER) a mortgage, deedoftrust,orothertypesecurity instrument. New Mexico-likecontractlaws. theory andthethirdonabackdatingtheory)with definitions (includinganyrefinements byPlaintiffs Law (Claim 6) California Unfair Competition Law (Claim 5) California Unfair Competition / Disgorgement (Claim 4) Unjust Enrichment /Restitution / Disgorgement (Claim 3) Unjust Enrichment /Restitution Implied Covenant(Claim 2) ProposedClasses Defendant 1.Multi-StateLenderPlacedClass U.S.Bank Breach ofContract(Claim 1) Claim Case 3:12-cv-02506-LBDocument250Filed06/13/14Page12of56 Plaintiffs assertbreachofcontractclaims fo A. ProposedMulti-stateClassesforBreachofContractClaim(Claim1) Wisconsin, orWyoming withintheapplicablestatuteoflimitations, wheresuch floodinsurance Oklahoma, Pennsylvania,RhodeIsland,SouthCarolina, Tennessee,Virginia,Washington, Arkansas, Delaware,Georgia, Maine,Minneso Jersey, NewYork,NorthDakota,Oregon,Texas, Connecticut, Florida,Illinois,Indiana,Iowa, N.A. forforce-placedfloodinsuranceonproperty inCalifornia,Alabama, Alaska, Colorado, secured byaFannieMae/FreddieMacUniform Instrument, whowerechargedbyU.S.Bank, mortgage loanownedbyU.S.Bank(andexcludingloansmerely servicedbythebank)and Proposed Multi-StateLender-PlacedClass 1. ProposedMulti-StateLender-PlacedFloodInsurance Class

See Motion,ECFNo.190-4at2-4. ASIC U.S. Bank ASIC U.S. Bank U.S. Bank r thefollowingclasses(thefirsttwoonakick-back twosubclassesbasedontheCalifornia-likeand 12 Kansas, Louisiana,Massachusetts,Missouri,New 3. CaliforniaBackdatedClass 2. CaliforniaQERClass 1. CaliforniaLender-PlacedClass 6. NewMexicoBackdatedClass 5. NewMexicoQERClass 4. NewMexicoLender-PlacedClass 3. CaliforniaBackdatedClass 2. CaliforniaQERClass 1. CaliforniaLender-PlacedClass 3. Multi-StateBackdatedClass 2. Multi-StateQERClass : Allpersonswithaclosed-endresidential ta, Mississippi,Montana, Nebraska,Nevada, in thereplybrief) aresetforth after thechart. b. SkelleyBackdatedSub-Class a. EllsworthBackdatedSub-Class b. SkelleyQERSub-Class a. EllsworthQERSub-Class b. SkelleyLender-PlacedSub-Class a. EllsworthLender-PlacedSub-Class Utah,West Virginia,NewMexico,Arizona, Id. at2n.2.

The word“mortgage” includes UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 C 12-02506 LB (ORDER) Case 3:12-cv-02506-LBDocument250Filed06/13/14Page13of56 modification, forbearance,shortsale,ordeed-in-lieuofforeclosure. ordinary courseofbusiness]orextinguished excluding personswhoseforce-placedfloodinsurancechargeswerecompletely refunded[inthe was procuredwiththeassistanceof American SecurityInsuranceCompany oritsaffiliates, Proposed Multi-StateQERClass: modification, forbearance,shortsale, or deed-in-lieuofforeclosure. ordinary courseofbusiness] orextinguished excluding personswhoseforce-placedfloodinsurance chargeswerecompletely refunded[inthe applicable statuteoflimitations, wheresuchinsurancewasbackdatedbymore than60days, placed floodinsuranceonpropertyintheUnited StatesbeforeJanuary1,2013andwithinthe Fannie Mae/FreddieMacUniform Instrument, w loan ownedbyU.S.Bank(andexcludingloansmerely servicedbythebank)andsecureda Proposed Multi-StateBackdatedClass: sale, ordeed-in-lieuofforeclosure. extinguished throughabankruptcy,foreclosurej insurance chargeswerecompletely refunded[intheordinarycourseofbusiness]or Security InsuranceCompany oritsaffiliates, excludingpersonswhoseforce-placed flood December 1,2011,wheresuchfloodinsurancewasprocuredwiththeassistance ofAmerican Wyoming withaneffective datewithintheapplicablestatuteof limitations andpriorto Pennsylvania, RhodeIsland,SouthCarolina,Tennessee,Virginia,Washington, Wisconsin, or Delaware, Georgia,Maine,Minnesota,Missi York, NorthDakota,Oregon,Texas,Utah,West Florida, Illinois,Indiana,Iowa,Kansas,Loui placed floodinsuranceonpropertyinCalifornia,Alabama, Alaska,Colorado, Connecticut, Fannie Mae/FreddieMacUniform Instrument, w owned byU.S.Bank(andexcludingloansmerely servicedbythebank)andsecureda 2. TheMulti-StateQualifiedExpenseReimbursement(“QER”)Classes 3. TheMulti-StateBackdatedFloodInsurance Classes Connecticut, Florida,Illinois,Indiana,Iowa Lender-Placed ClasswhosepropertyislocatedinCalifornia,Alabama, Alaska,Colorado, (a) ProposedEllsworth Lender-PlacedSub-Class Wisconsin, andWyoming. Oklahoma, Pennsylvania,RhodeIsland,SouthCarolina,Tennessee,Virginia,Washington, Delaware, Georgia,Maine,Minnesota, Lender-Placed ClasswhosepropertyislocatedinNewMexico,Arizona,Arkansas, (b) ProposedSkelleyLender-PlacedSub-Class New Jersey,York,NorthDakota,Or Island, SouthCarolina,Tennessee,Virginia,Washington, Wisconsin, andWyoming. Minnesota, Mississippi,Montana,Nebraska property islocatedinNewMexico,Ariz (b) ProposedSkelleyQERSub-Class North Dakota,Oregon,Texas,Utah,andWest Virginia. Illinois, Indiana,Iowa,Kansas,Louisiana, whose propertyislocatedinCalifornia,Alabama, Alaska,Colorado,Connecticut, Florida, (a) ProposedEllsworth QERSub-Class:

All personswithaclosed-endresidentialmortgage loan Allpersonswithaclosed-endresidentialmortgage : AllpersonswithintheMulti-StateQERwhose Mississippi, Montana,Nebraska,Nevada, ona, Arkansas,Delaware,Georgia,Maine, throughabankruptcy,foreclosurejudgment, loan throughabankruptcy,foreclosure judgment, loan 13 siana, Massachusetts,Missouri,NewJersey, ssippi, Montana,Nebraska,Nevada,Oklahoma, egon, Texas,Utah,andWest Virginia. AllpersonswithintheMulti-StateQERClass Massachusetts, Missouri,NewJersey,York, , Kansas,Louisiana,Massachusetts,Missouri, , Nevada,Oklahoma, Pennsylvania,Rhode Virginia,NewMexico,Arizona,Arkansas, udgment, loanmodification, forbearance,short- ho werechargedbyU.S.Bank,N.A.forforce- ho werechargedbyU.S.Bank,N.A.forforce- : AllpersonswithintheMulti-State : AllpersonswithintheMulti-State

UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 California’s Unfair Competition Law(claims 5and6)onbehalf of threeCalifornia classes. contract claims andthustoborrowerswhoseloansareownedbyU.S.Bank;excludingWeaver). behalf ofthreeCaliforniaclasses. C 12-02506 LB (ORDER) Case 3:12-cv-02506-LBDocument250Filed06/13/14Page14of56 Ellsworth andWeaver assertclaims forunjustenrichment (claims 3and 4)andviolationsof Ellsworth assertsaclaim forbreachofthecovenantgoodfaithandfairdealing(claim 2)on B. ProposedCaliforniaStateClasses judgment, loanmodification, forbearance,shortsale,ordeed-in-lieuofforeclosure. refunded [intheordinarycourseofbusiness] than 60days,excludingpersonswhoseforce-placed floodinsurancechargeswerecompletely after May16,2008andbeforeJanuary1,2013,where suchinsurancewasbackdatedbymore by U.S.Bank,N.A.forforce-placedfloodinsuran by thebank)andsecuredaFannieMae/Freddie MacUniform Instrument, whowerecharged closed-end residentialmortgage loanowned byU.S.Bank(andexcludingloansmerely serviced Proposed CaliforniaBackdatedGood judgment, loan modification, forbearance,shortsale,ordeed-in-lieuofforeclosure. refunded [intheordinarycourseofbusiness] affiliates, excludingpersonswhoseforce-placedfloodinsurancechargeswerecompletely insurance wasprocuredwiththeassistanceofAmerican SecurityInsuranceCompany orits effective dateonorafterMay16,2008andpriortoDecember 1,2011,wheresuchflood U.S. Bank,N.A.forforce-placedfloodinsurance bank) andsecuredbyaFannieMae/FreddieMacUniform Instrument, whowerechargedby end residentialmortgage loanownedbyU.S.Bank(andexcludingloansmerely servicedbythe Proposed CaliforniaQERGoodFaithandFairDealingClass: sale, ordeed-in-lieuofforeclosure. extinguished throughabankruptcy,foreclosurej insurance chargeswerecompletely refunded[intheordinarycourseofbusiness]or Security InsuranceCompany oritsaffiliates, excludingpersonswhoseforce-placed flood after May16,2008,wheresuchfloodinsurancewasprocuredwiththeassistanceofAmerican by U.S.Bank,N.A.forforce-placedfloodinsuran by thebank)andsecuredaFannieMae/FreddieMacUniform Instrument, whowerecharged closed-end residentialmortgage loanownedbyU.S.Bank(andexcludingloansmerely serviced Proposed CaliforniaLender-PlacedGoodFaithandFairDealingClass: 2. CaliforniaUnjustEnrichmentandUnfairCompetition Claims 1. CaliforniaBreachoftheCovenantGoodFaithandFairDealingClaim Rhode Island,SouthCarolina,Tennessee,Virginia,Washington, Wisconsin, andWyoming. Maine, Minnesota,Mississippi,Montana,Ne Class whosepropertyislocatedinNewMe (b) ProposedSkelleyBackdatedSub-Class: New Jersey,York,NorthDakota,Or Connecticut, Florida,Illinois,Indiana,Iowa Backdated ClasswhosepropertyislocatedinCalifornia,Alabama, Alaska,Colorado, (a) ProposedEllsworth BackdatedSub-Class:

See id. ; Reply,ECFNo.222-4at7(limited bydefinitionto

(Claims 2through6) Faith andFairDealingClass: 14 or extinguishedthroughabankruptcy,foreclosure or extinguishedthroughabankruptcy,foreclosure egon, Texas,Utah,andWest Virginia. xico, Arizona,Arkansas,Delaware,Georgia, , Kansas,Louisiana,Massachusetts,Missouri, udgment, loanmodification, forbearance,short braska, Nevada,Oklahoma, Pennsylvania, AllpersonswithintheMulti-StateBackdated on propertyintheStateofCaliforniawithan ce onpropertyintheStateofCaliforniaor ce onpropertyintheStateofCaliforniaor AllpersonswithintheMulti-State All personswithaclosed- All personswitha All personswitha See UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 C 12-02506 LB (ORDER) dealing (claim 2)onbehalfofthreeNewMexicoclasses. Motion, ECFNo.190-4at5. Case 3:12-cv-02506-LBDocument250Filed06/13/14Page15of56 Lawrence andDoneneSkelleyassertaclaim forbreachofcovenantgoodfaithandfair C. ProposedNew MexicoClasses bank) andsecuredbyaFannieMae/FreddieMac Uniform Instrument, whowerechargedby end residentialmortgage loanownedbyU.S.Bank(andexcluding loansmerely servicedbythe Proposed New MexicoQERGoodFaithandFairDealingClass: sale, ordeed-in-lieuofforeclosure. extinguished throughabankruptcy,foreclosurej placed floodinsurancechargeswerecompletely refunded[inthe ordinarycourseofbusiness]or of American SecurityInsuranceCompany or itsaffiliates, excludingpersonswhoseforce- Mexico onorafterMay16,2008,wheresuchflood insurancewasprocuredwiththeassistance charged byU.S.Bank,N.A.forforce-placedflood insuranceonpropertyintheStateofNew serviced bythebank)andsecuredaFannieMae/FreddieMacUniform Instrument, whowere a closed-endresidentialmortgage loanownedbyU.S.Bank(andexcludingloansmerely Proposed New MexicoLender-PlacedGoodFaithandFairDealing Class: sale, ordeed-in-lieuofforeclosure. extinguished throughabankruptcy,foreclosurej insurance chargeswerecompletely refunded[intheordinarycourseofbusiness]or insurance wasbackdatedbymore than60days,excludingpersonswhoseforce-placedflood in theStateofCaliforniaonorafterMay16,2008andbeforeJanuary1,2013,wheresuch Instrument, whowerecharged byU.S.Bank,N. closed-end residentialmortgage loansecuredbyaFannieMae/FreddieMac Uniform Proposed CaliforniaBackdatedUnju foreclosure judgment, loanmodification, forbearance, completely refunded [intheordinarycourseof Company orits affiliates,excludingpersonswhoseforce-placedfloodinsurancechargeswere where suchfloodinsurancewasprocuredwiththeassistanceofAmerican SecurityInsurance California withaneffectivedateonorafterMay16,2008andpriortoDecember 1,2011, were chargedbyU.S.Bank,N.A.forforce-pl end residentialmortgage loansecuredbyaFannieMae/FreddieMacUniform Instrument, who Proposed CaliforniaQERUnjustEnrichmentandUCLClass: forbearance, shortsale,ordeed-in-lieuofforeclosure. of business]orextinguishedthroughabankrupt whose force-placedfloodinsurancechargeswerecompletely refunded[intheordinarycourse with theassistanceof American SecurityInsuranceCompany oritsaffiliates, excludingpersons in theStateofCaliforniaonorafterMay16,2008,wheresuchfloodinsurancewasprocured Instrument, whowerechargedbyU.S.Bank,N. closed-end residentialmortgage loansecuredbyaFannieMae/FreddieMacUniform Proposed CaliforniaLender-PlacedUn 2 1. NewMexicoBreachoftheCovenantGoodFaithandFairDealingClaim Weaver isnotaclassrepresentative fortheQERclass.

2

st EnrichmentandUCLClass: just EnrichmentandUCLClass: 15 aced floodinsuranceonpropertyintheStateof business]orextinguishedthroughabankruptcy, cy, foreclosurejudgment, loanmodification, A. forforce-placedfloodinsuranceonproperty A. forforce-placedfloodinsuranceonproperty udgment, loanmodification, forbearance,short udgment, loanmodification, forbearance,short shortsale,ordeed-in-lieuofforeclosure. Id. at6-7. Allpersonswithaclosed- Allpersonswithaclosed- All personswitha All personswitha Allpersonswith UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 C 12-02506 LB (ORDER) opposition, U.S.Banksaid thatitdiscoveredatEllsworth’sOctober4,2013 depositionthat V. ADDITIONALRELEVANTPROCEDURAL HISTORY classes. Case 3:12-cv-02506-LBDocument250Filed06/13/14Page16of56 On September 24,2013,Ellsworthmoved forclasscertification. The Skelleysassertaclaim forunjustenrichment onbehalfofthefollowingthreeNewMexico foreclosure. bankruptcy, foreclosurejudgment, loanmodifica were completely refunded[intheordinaryc backdated bymore than60days,excludingpersonswhoseforce-placed floodinsurancecharges Mexico onorafterMay16,2008andbeforeJanuary 1,2013,wheresuchinsurancewas charged byU.S.Bank,N.A.forforce-placedflood insuranceonpropertyintheStateofNew residential mortgage loan securedbyaFannieMae/FreddieMacUniform Instrument, whowere Proposed New MexicoBackdatedUnjustEnrichmentClass: modification, forbearance,shortsale,ordeed-in-lieuofforeclosure. ordinary courseofbusiness]orextinguished excluding personswhoseforce-placedfloodinsurancechargeswerecompletely refunded[inthe was procuredwiththeassistanceof American SecurityInsuranceCompany oritsaffiliates, Mexico onorafterMay16,2008and charged byU.S.Bank,N.A.forforce-placedfloodinsuranceonpropertyintheStateofNew residential mortgage loansecuredbyaFannieMae/FreddieMacUniform Instrument, whowere Proposed New MexicoQERUnjustEnrichmentClass: forbearance, shortsale,ordeed-in-lieuofforeclosure. business] orextinguishedthroughabankruptc force-placed floodinsurancechargeswerecompletely refunded[intheordinarycourseof assistance of American SecurityInsuranceCompany oritsaffiliates, excludingpersonswhose New MexicoonorafterMay16,2008,wheresuchfloodinsurancewasprocuredwiththe were chargedbyU.S.Bank,N.A.forforce-pl end residentialmortgage loansecuredbyaFannieMae/FreddieMacUniform Instrument, who Proposed New MexicoLender-PlacedUnjustEnrichment judgment, loanmodification, forbearance,shortsale,ordeed-in-lieuofforeclosure. refunded [intheordinarycourseofbusiness] than 60days,excludingpersonswhoseforce-placedfloodinsurancechargeswerecompletely or afterMay16,2008andbeforeJanuary1,2013,wheresuchinsurancewasbackdatedbymore by U.S.Bank,N.A.forforce-placedfloodinsuran by thebank)andsecuredaFannieMae/FreddieMacUniform Instrument, whowerecharged closed-end residentialmortgage loanownedbyU.S.Bank(andexcludingloansmerely serviced Proposed New MexicoBackdatedGoodFaithandFairDealingClass: forbearance, shortsale,ordeed-in-lieuofforeclosure. of business]orextinguishedthroughabankrupt whose force-placedfloodinsurancechargeswerecompletely refunded[intheordinarycourse with theassistanceof American SecurityInsuranceCompany oritsaffiliates, excludingpersons after May16,2008andpriortoDecember 1,2011,wheresuchfloodinsurancewasprocured U.S. Bank,N.A.forforce-placedfloodinsurance 2. NewMexicoUnjustEnrichmentClaim Id. at6-7.

prior toDecember1,2011 ourse ofbusiness]orextinguishedthrougha throughabankruptcy,foreclosurejudgment, loan 16 or extinguishedthroughabankruptcy,foreclosure aced floodinsuranceonpropertyintheStateof y, foreclosurejudgment, loanmodification, cy, foreclosurejudgment, loanmodification, tion, forbearance,shortsale,ordeed-in-lieuof on propertyintheStateofNewMexicoor ce onpropertyintheStateofNewMexico Allpersonswithaclosed-end

Class: All personswithaclosed-end See , wheresuchfloodinsurance ECFNo.135.Inits Allpersonswithaclosed- All personswitha UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 C 12-02506 LB (ORDER) specifically: “entail some overlapwiththemerits oftheplaintiff’sunderlyingclaim.” 131S.Ct.at2551.More 2550 (2011)(internalquotationmarks and citationomitted). The“rigorousanalysis”oftenwill prerequisites ofRule23(a)havebeensatisfied.” fairly andefficientlyadjudicatingthecontroversy. affecting onlyindividualmembers, andaclassacti court findsthatquestionsoflaworfactcomm typicality, andadequacyofrepresentation.Acourtmay certifyaclassunderRule23(b)(3)ifthe certification thenmust showthefollowing prerequisitesof Rule23(a):numerosity, commonality, or defenses”); 23(c)(1)(B) (“[a]norderthatcertifiesaclassactionmust definetheclassandclaims, issues, I. CLASSCERTIFICATION a hearingonthemotion forclasscertificationandU.S.Bank’stwomotions. management schedule,anddeniedDefendants’mo complaint, orderedadditionalbriefingtoaddressthenewclassdefinitions,issuedacase to MotionAmend, ECFNo.165-1,¶¶7-9.Itissuedarefund. Ellsworth, Ms.Skelley’spropertywasneverina internal reviewofthenewproposedrepresentativeplaintiffsand“discoveredthat,likeMr. moved toamend thecomplaint. 132-5. Ellsworththenproposednewclassdefinitionsandadditionalrepresentatives Ellsworth’s propertywasneverinafloodzone,anditsaidthatwouldissuerefund. Case 3:12-cv-02506-LBDocument250Filed06/13/14Page17of56 prepared toprovethatthere are Rule 23.Thedoesnotsetforthamere plead [A] partyseekingtomaintain aclassaction must affirmatively demonstrate hiscompliance with A thresholdrequirement isthatPlaintiffsmust establishadefinableclass. Plaintiffs move tocertifyadamages classesunderRule23(b)(3). 23(a). or fact,typicalityofclaims ordefenses,a “Certification isproperonlyifthetrialcourtsatisfied,afterarigorousanalysis,that

The partymust also satisfythroughevidentiaryproofatleastoneof theprovisionsof Mazur v.EbayInc.

See , 257F.R.D.563,567(N.D.Cal.2009).Apartyseekingclass in fact ECFNos.149-5,151,152.ThenU.S.Bankconductedan sufficientlynumerous parties,common questionsoflaw ANALYSIS nd adequacyofrepresentation, asrequiredbyRule on toclassmembers predominate overanyquestions Wal-MartStores,Inc.v.Dukes 17 flood zone.”Wolfe Decl.Supp.U.S.BankOpp’n on issuperiortootheravailablemethods for tion todismiss. OnMay15,2014,thecourtheld See ing standard.Rather,apartymust notonly be Fed.R.Civ.P.23(b)(3). Id. ¶9.Thecourtallowedthenew See , 131S.Ct.2541, Fed.R.Civ.P. See ECFNo. UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 C 12-02506 LB (ORDER) Corp. potential member canbeidentifiedatthecommencement ofthe action.” identification of individualclassmembers”). Still, “the classneednotbesoascertainablethatevery damage claims arelikely,Rule23(b)(3)classactionsrequireadefinition that willpermit receive thebestnoticepracticableandhavean Manual forComplex Litigation (Fourth)§21.222(2013)(“Becauseindividualclassmembers must is amanageable process thatdoesnotrequiremu Class Actions§3:3(5thEd.2013)(“Administrative feasibilitymeans thatidentifyingclassmembers determine withoutsignificantinquirywhichsubscribersownedsuchdevices”); defendant didnotmaintain recordstoidentifythosecustomers, rendering it“impossible to subscribers whoownedcable-readytelevisionsorrelatedequipment notascertainablewherethe C 06-06352WHA, 2007WL 2015440,at*8(N.D.Cal.July11,2007)(proposedclassofcable JSW, 2013WL 4488802(N.D.Cal.Aug.19,2013)(collectingcases); is aclassmember” andthus“boundbythejudgment.” criteria “sothatitisadministratively feasible [for acourt] todetermine whetheraparticularperson Zinser v.AccuflixRes.Inst.,Inc. moving party hasmet itsburden ofproof,thenthecourthasbroaddiscretiontocertifyclass. Conn. Ret.Plans&TrustFunds determining whethertheRule23prerequisitesforclasscertificationaresatisfied.” Merits questionsmay beconsideredtotheextent–butonlythattheyarerelevant for Still, “Rule23grantsnolicensetoengageinfree-rangingmerits inquiriesatthecertificationstage. Comcast Corp.v.Behrend Case 3:12-cv-02506-LBDocument250Filed06/13/14Page18of56 A classshouldbesufficientlydefiniteand“clearlyascertainable”byreferencetoobjective A. PlaintiffsEstablishaDefinable,AscertainableClass govern Rule23(b). factual andlegalissuescomprising theplaintiff’s is sobecausetheclassdetermination generallyinvolvesconsiderationsthatareenmeshed inthe an analysiswillfrequentlyentailoverlapwiththemerits oftheplaintiff’sunderlyingclaim. That satisfied, afterarigorousanalysis,thattheprerequisitesofRule23(a)havebeensatisfied. to restonthecertificationquestion,and.isproperonlyiftrialcourt Rule 23(b)..[I]tmay benecessaryforthe , No.C-12-05859EDL, 2013 WL 6236743 (N.D.Cal.Dec.2,2013)(quotationomitted).

, 133S.Ct.1426,1432(2013)(quotationmarks andcitationsomitted). , 133S.Ct.1184,1194-95(2013).Ifacourtconcludesthatthe , 253F.3d1180,1186, opportunitytooptout,andbecauseindividual court toprobebehindthepleadingsbeforecoming ch, ifany,individualfactualinquiry.”);Annotated 18 cause ofaction.Thesame analyticalprinciples Shepard v.Lowe’sHIW,Inc. amended by 273F.3d1266(9thCir.2001). Deitzv.ComcastCorp. Ortiz v.CVSCaremark see also Amgen Inc.v. , No.C12-3893 Newberg on

Such , No. UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 C 12-02506 LB (ORDER) 5 at18n.11,again,thenet amount is reflected inthedata.Again,itdoesnotmatter whyrefunds to calculatedamages forborrowerswho make partial payments, course ofbusinessorotherwisecancelledextinguished. that U.S.Bankcanidentifyborrowerswhosecharges werecompletely refundedintheordinary the classareidentifiable.Itdoesnotmatter whyachargeisrefundedorextinguished;itsufficient Richter Decl.,ECFNo.221-3,¶5; amount ofanyrefund,andthenetamount (meaning, thegrossamount lessanyrefund). and effectivedatesforforce-placedinsurance,thecoverageamount, thegrossamount charged,the 16 (citingStewartDecl.,ECFNo.207,¶¶5-6). detailed toexplainwhythatoccurred”withouta indicate thatacomplete refundoccurredorachargewasextinguished,but theyareinsufficiently 200-5 at11; conduct afile-by-filereviewofallborrowersw borrower’s FloodLPIchargehasbeencompletely refundedthroughaflat-outcancellationisto account ormanually revieweachborrower’sloanfile”andthe“onlywaytodetermine whethera Defendants, “[t]heonlywaytotellhowmuch hasbeenpaidistoanalyzeeachborrower’sescrow Opp’n, ECFNo200-5at18;ASICNo. records donotallowittoidentifytheseborrowerswhoareexcludedfrom theclass. extinguish theobligationtopayFPIchargesinwaysotherthansixexamples. otherwise hadtheirobligationsextinguished.Defendantsdonotarguethatitispossibleto additional limitation). Theselimitations arecraftedtoexcludeanyonewhoreceivedafullrefundor foreclosure.” bankruptcy, foreclosurejudgment, loanmodifica were [1]”completely refunded[‘intheordinary Case 3:12-cv-02506-LBDocument250Filed06/13/14Page19of56 Moreover, totheextentthatU.S.Bankmakes theargument thatafile-by-filereviewisrequired According toPlaintiffs,U.S.Bankproduceddataforborrowersincludingtheloantype,issue Defendants agreethatthislimitation isrequiredforclasscertificationbutassertthatitsbusiness As refined,theclassdefinitionsexcludepers see See supra StewartDecl.,ECFNo.207,¶¶4-5.ASICaddsthat“U.S.Bank’srecordsmight

Statement; Reply,ECFNo.222-4(insertingbracketedquoteasan id. Exs.1-2.Thisinformation showsthatexcludedmembers of ith FloodLPIcharges.”U.S.BankOpp’n,ECFNo. course ofbusiness’]or[2]extinguishedthrougha ons whoseforce-placedfloodinsurancecharges tion, forbearance,shortsale,ordeed-in-lieuof file-by-file review.ASICOpp’n,ECFNo.199at 19 199 at16.Morespecifically,accordingtothe see U.S.BankOpp’n,ECF No. 200- See U.S.Bank See 3d UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 C 12-02506 LB (ORDER) would beunmanageable toconductthefile-by-file participates intheprograms andhashadtransactionsfundedthroughthem. providing helptoborrowerswithreinstatingaloan (includingupto$25,000). providing upto$3,000permonth for12months toborrowerswhoareinvoluntarilyunemployed or mortgage assistancetoborrowerswhoaredelinquent orfacingdefault. Keep YourHome California. received assistancefrom loanassistanceprograms suchastheU.S.Treasury’s HardestHitFundor See part ofalitigationstrategy,werenotintheordinary Ellsworth ortheSkelleys.Ascourtheldpreviously,refundsinthislitigationarguablywere “complete refundintheordinarycourseofbusiness”limitation iscraftedsothatitdoesnotexclude because U.S.BankrefundedortriedtorefundtheirFPIchargesinthislitigation,theyarenot.The sale, ordeed-in-lieuofforeclosure.” (2) extinguishedthroughabankruptcy,foreclosurej placed floodinsurancechargeswere(1)completely refundedintheordinarycourseofbusinessor borrowers havenotpaidthem. borrowers withchargesonthebooksthatwerenototherwiserefundedorextinguished,evenif (reaching thisconclusion).Also,andforthereasonsstatedin entail some effortonthepartofcounselforbothparties”toidentifyclassmembers. *10 (N.D.Cal.June21,2013).Thatinformation isascertainablefrom therecords,evenifit“will recovered orextinguishedchargesisappropriate. are thedamages) inthenetamount. and theamount ofanywrite-offbyU.S.Bankisascertainablefrom thegeneraldataandreflected(as a loanmodification), thenetamount apparentlyisonthespreadsheet,reasondoesnotmatter, were made. Ifextinguishments aredifferent(for Case 3:12-cv-02506-LBDocument250Filed06/13/14Page20of56 3/21/14Order,ECFNo.186at25. ASIC alsoarguesthattheclassdefinitionisunmanageable becausesome borrowersmay have To theextentthatDefendantsargueEllsworthorSkelleysareexcludedfrom theclass Thus, likethedefinitionin

See Lane Id. ASICOpp’n,ECFNo.199at11.Theprograms provide at*9.Thelimitation willread:“excludingpersonswhoseforce-

v. WellsFargoBank,N.A. 20 example, becausethereisapartialwrite-offduring See review neededtoascertain whethertheprogram courseofbusiness,anddidnotmoot theclaims. udgment, loanmodification, forbearance,short No.C12-04026WHA, 2013WL 3187410,at Lane ,

limiting theclasstoexclude , theclassdoesnotexclude Id. Examples include Id. See id. ASICarguesthatit U.S. Bank See id. UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 C 12-02506 LB (ORDER) questions oflaworfactcommon totheclass.”Ru Decl., ECFNo.119-1,¶¶23-24.Thatsubmission satisfiesthenumerosity requirement. ASIC paidQERstoU.S.BISand4,500thatare backdated more than60days). flood insurancepoliciesisapproximately 16,000(14,000with effectivedatesduringtheperiodthat element. Plaintiffs submitted evidenceestablishingthatthetotalnumber of loanswithforce-placed members isimpracticable.” Defendantsdonotchallengecertificationbasedonthenumerosity typicality, andadequacyofrepresentation. eliminates theneedfor afile-by-file reviewandaddressesU.S.Bank’smanageability concern. owned byU.S.Bankandtoexcludeloans“merely servicedbythebank.” the replybrief,Plaintiffsnarrowedclassdefin exclusively inaservicingcapacity.”Plaintiffs’ it. U.S.BankOpp’n,ECFNo.200-5at18.hasidentified“theloanswhereitacted U.S. Bankacquireda“partialinterest”inloansufficienttoallowbreachofcontractclaim against services theloans(aswithMs.Weaver’s loan),af Defendants donotofferanyarguments thatsupportacontraryconclusion. allow theprogram fundstobeusedfortheirintendedpurpose:delinquentmortgage payments. assistance toLPIcharges,thenrefundsofthech programs, whichistohelpborrowerswithdelinquentmortgages. IfDefendantscreditedmortgage no file-by-filereviewwillbenecessary.Thisappr payments creditedtoLPIcharges,whichinturneliminates ASIC’smanageability concernbecause assistance wascreditedtoborrowers’LPIcharges. Case 3:12-cv-02506-LBDocument250Filed06/13/14Page21of56 Under Rule23(a)(2),aclass cannotbecertifiedunlessPlaintiffsestablish that“thereare Rule 23(a)(1)requiresthat,foraclasstobecertified,“theissonumerous thatjoinderofall Plaintiffs must showthefollowing prerequisitesof Rule23(a):numerosity, commonality, B. Rule23(a)Requirements Defendants alsonotethatU.S.Bankownssome loansandservicesothers.IfU.S.Bankjust 2. Commonality 1. Numerosity

Reply, ECFNo.222-4at7.Toaddresstheissue,in arges –again,identifiablefrom generalrecords– 21 ition forthecontractclaims toinclude onlyloans le 23(a)(2)doesnotrequire Plaintiffstoshowthat ile-by-file reviewisneededtodetermine whether oach alsoisconsistentwiththepointof Id. Thisorderdoesnotexcludeprogram Id . Thislimitation See 1st Richter UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 C 12-02506 LB (ORDER) practices wereunfairunder California’sunfaircompetition law. duty ofgoodfaithandfairdealing,whetherDefe state claims includewhethertheFPIpracticesof Motion, ECFNo.190-4at31-32;Reply, potential toimpede thegenerationofcommon answers.” to driveresolutionofthelitigation.Dissimilarities withintheproposedclassarewhathave the even indroves–butratherthecapacityofaclasswideproceedingtogeneratecommon answersapt one stroke.” of itstruthorfalsity willresolveanissuethatiscentraltothevalidityof eachoneof theclaims in “must beof suchanaturethatitiscapableof classwideresolution–whichmeans thatdetermination have allsufferedaviolationofthesame provisionoflaw.” demonstrate thatclassmembers havesufferedthesame injury.Thisdoesnotmean merely thatthey will do.” Corp. 23(a)(2). legal issueswithdivergentfactualpredicates each classmember’s claim isbasedonidenticalfactualandlegalissues:“Theexistenceofshared Case 3:12-cv-02506-LBDocument250Filed06/13/14Page22of56 The allegationshereare that Plaintiffshadidenticalform contracts, thepolicieswereapplied 6. Whether statutoryamendments applyretroactivelytoauthorizebackdatedFPI. Whether significantlybackdating coverageisreasonableandappropriate; 5. Whether theQERsandsubsidizedservicesthatU.S.Bankreceivedfrom ASICwere 4. Whether U.S.BankhadthecontractualauthorityunderParagraph5ofUniform 3. Whether ASICofferedinsurancetrackingservicestoU.S.Bankatadiscountinreturnforits 2. Whether theQERsthatASICprovidedtoU.S.BISwerelegitimate orsimply constituteda 1. Plaintiffs identifythefollowingcommon factual andlegalquestions,among others: , 150F.3d1011,1019(9thCir.1998)). “reasonable andappropriate,”asrequiredbyParagraph9oftheUniform Instrument; FPI; and(2)whetherithadtheauthoritytosignificantlybackdatecoverage; Instrument to(1)arrangefor cashorin-kindcompensation for itself oritsaffiliates on FPI business,andif so,whetherthisconstitutedatypeof kickback; kickback; Parrav.Bashas,Inc. Dukes Id. “What matters toclasscertification.isnottheraisingofcommon ‘questions’– , 131S.Ct.at2556(quotationomitted).

, 536F.3d975,978(9thCir.2008)(quoting

UnderRule23(a)(2),“evenasinglecommon question is sufficient”tomeet therequirements ofRule kickbacksandbackdatingviolatedU.S.Bank’s ndants wereenrichedunjustly,andwhetherthe 22 222-4 at6.Additionalcommon issuesonthe

“Commonality requirestheplaintiff to Id. Id. (citationomitted). at 2551. See Motion, ECFNo.190-4 at 32.

The common question Hanlonv.Chrysler UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 C 12-02506 LB (ORDER) litigation.” putative classrepresentativeissubjecttounique defenses whichthreatentobecome thefocusof representative alignswiththeinterestsof theclass..[C]lass certification isinappropriatewhena omitted). “Thepurposeof thetypicalityrequirement istoassurethattheinterest of thenamed Dataproducts Corp. and whetherotherclassmembers havebeeninjuredbythe same course ofconduct.” similar injury,whethertheactionisbasedonconductwhichnotuniquetonamed plaintiffs, F.3d 970,984(9thCir.2011).“Thetestoftypicalityiswhetherothermembers havethesame or to thespecificfactsfrom whichitaroseorthereliefsought.” omitted). “Typicalityrefers tothenatureof theclaim ordefense of theclassrepresentative,andnot not besubstantiallyidentical.” claims aretypicaliftheyreasonablyco-extensi class representatives[must be]typicaloftheclaims 24. Theorderaddressespredominance below. common issues. (N.D. Cal.June21,2013)(commonality satisfiedastoaCaliforniaclass). (UCL claim); No. C10-01313WHA, 2011WL 1225900,at*8(N.D.Cal.Mar.31,2011)(TILAclaim), *13 have foundcommonality underRule23(a)(2). more than60days. to maximize costscollectedfrom borrowersbyfo from acaptiveinsuranceprovider(ASIC)intheform ofQERsordiscountedtrackingservices,and scheme toforceplaceinsuranceonborrowersinawaydesignedincreasekickbacksU.S.Bank uniformly, andform noticesweresentabouttheFPI Case 3:12-cv-02506-LBDocument250Filed06/13/14Page23of56 Rule 23(a)(3)requires,asaprerequisitetoclass Defendants donotargueotherwiseandinsteadar The claims aretypical.Theallegations hereareth 3. Typicality Id. Lane v.WellsFargoBank,N.A.

See

, 976F.2d497,508(9thCir.1992)(citationand internal quotationmarks See U.S.BankOpp’n,ECFNo.200-5at10-23;ASIC19915- Motion,ECFNo.190-4at23-26.Insimilar cases,courtsinthisdistrict Hanlon 150 F.3dat1020(internalquotationmarks andcitation , No.C12-04026WHA, 2013WL 3187410,at*8 See, e.g., 23 rce-placing LPFIpoliciesthatwerebackdated ve withthoseofabsentclassmembers; theyneed ordefensesoftheclass..[R]epresentative certification, that“theclaims ordefensesofthe andthecharges.Plaintiffsallegeacommon gue thatindividualissuespredominate over at Plaintiffshadidentical form contracts, and

Hofstetter v.ChaseHomeFinance,LLC Ellis v.CostcoWholesaleCorp. Hanonv. , 657 , UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 C 12-02506 LB (ORDER) Richter Decl.Ex.16,ECF No.137-10. Expense Reimbursement Addendum toSchedule1of theMasterSupplierServiceAgreement, 1st effective dateofDecember 1,2013(althoughthe addendum isredacted). In addition,U.S.Bankmakes noshowing thattheQERswouldhaveaffectedSkelleys point outthatU.S.BankprovidesnoevidenceQERswerenotpaidfortheSkelleys’loan. and thedamages wouldbethesame fortheSkelleysandQERclassmembers. December 1, 2011 LPFIcharges,thenunderPlaintiffs’theory,thechargeswereinflatedimproperly, accrue asoftheeffectivedatecoverage,notissuedate. to borrowersininflatedchargesfortheLPFI. charged forFPIuntilafterDefendantsterminated QERs. U.S.BankOpp’n,ECFNo.200-5at30. the classdefinition–arenottypical(oradequate)representativesbecausetheywere borrower ischargedfortheFPI.Thus,U.S.Bankargues,Skelleys–whiletechnicallymeeting requires tyingtheFPIchargetoQER,meaning, U.S.BankneedstobepaidtheQERwhen But U.S.Bankarguesthattheclaim ofanunlawfulkickbackintheform ofaQERnecessarily they meet the classdefinitionbecausetheeffectivedatefortheirFPIisbeforeDecember 1,2011. Statement. TheSkelleysandWeaver werenotchargedforFPIuntilafterDecember 1,2011,but effective datewithintheapplicablestatuteoflimitations andpriortoDecember 1,2011.” definitions definetheQERclassesbyreferencetopersonswhowerechargedforFPI“withan December 1,2011. for theFPI.U.S.BankOpp’n,ECFNo.200-5at and classessubclassesaddressdifferent theoriesof liability. the policieswereapplieduniformly (includingthroughuniform notices).Theharms areidentical, Case 3:12-cv-02506-LBDocument250Filed06/13/14Page24of56 Plaintiffs’ QERtheoryisthattheQERswerereallykickbackstoU.S.Bankpassedon First U.S. Bankchallengestypicalityinfour ways. 3 Thedocuments filedbyPlaintiffsareundatedbutthetermination agreement hasan , itarguesthattheQERtheoryrequirespayment ofQERswhentheborrowerwascharged

Id. (notingthatPlaintiffsconcedethispoint). See 30.DefendantsdiscontinuedQERseffective 24 Reply,ECFNo.222-4at19.ChargesforLPFI 3 Plaintiffs’revisedclass Id. If QERsarebuiltintothepre- See Termination ofthe Id . Plaintiffsalso See supra Id. UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 harm (intheend)issame. and notices. into astandardhome mortgage loan,whichwassubjecttothesame floodinsurancerequirements a floodzone.Wolfe Decl.,ECFNo.206,¶9.ButEllsworth’sconstructionloanwaslaterconverted not requirefloodinsurance;onlyimproved realestatedoes,andeventhen,onlyifthestructureisin construction loan,notahome loan.U.S.Bank C 12-02506 LB (ORDER) pursuant tostandardpolicies. converted toastandardhome mortgage loanwiththesame terms resultinginthesame FPIimposed Ellsworth’s loanbeganas aconstructionloandoesnotmatter because intheend,hismortgage contracts in franchisees whoenteredintoFTAscontainingdifferent language.” language.” class representativesbecausethefranchisees“si advertising agency,among others,forbreachoftheirFTAs. was afranchisor-franchiseesuitinwhichtenmuffler shopowners suedthefranchisorandits remanded inpartbecausetheplaintiffswere nottypicaloftheputativeclassmembers. Broussard members butnotwithotherclassmembers’”) Trade Agreements] raisethedistinctpossibilitythattherewasabreachofcontractwithsome class for thepropositionthatthereisno“typicalitywhere‘[t]hedifferencesbetween[Franchiseand explanation) at 1194-95. does soonlytotheextentthattheyarerelevantRule23prerequisites. coherent theoryontheeffectofQERsFPIcharges.While thecourtconsidersmerits issues,it the same injuryasputativeclassmembers whofitwithinthe classdefinition,andPlaintiffsasserta insurance class. plaintiffs withforce-placedfloodinsurancewere 2013). SunTrust Mortg.,Inc. because theywerenotchargeduntilafterQERsterminated, U.S.Bank cites because theyweretreateddifferentlythantheputativeclassmembers. U.S.BankOpp’n, ECFNo. differently thanotherproposedclassmembers. Case 3:12-cv-02506-LBDocument250Filed06/13/14Page25of56 Second Third See 5 4 InsupportofitsconclusionthatEllsworth InsupportofitsconclusionthattheSkelleysare“whollyinadequateandnottypical” , U.S.BankarguesthatEllsworthandtheSkelleysareatypicalclassrepresentatives , theFourthCircuitreversedclasscertification(and a$590million judgment) and , U.S.BankarguesthatEllsworth’sclaims U.S.BankOpp’n,ECFNo.200-5at30-31. Id. Broussard Broussard v.MeinekeDiscountMufflerShops,Inc. See at340.Thus,“thecontractclaims of Wolfe Dep.36:17-37:10,1stRichterDecl.Ex.4,ECFNo.139-10.Ellsworth’s See Gooden,

, No.2:11-cv-02595-JAM-DAD,2013WL 6499250,at*9(E.D.Cal.Dec.11, , thiscaseultimately involvesthesame form contracts,andthefactthat 2013WL 6499250,at*9.Thiscaseinvolvesnamed plaintiffswith 5

. U.S.BankOpp’n,ECFNo.200-5at31.In Opp’n, ECFNo.200-5at31.Constructionloansdo gned FTAscontainingmaterially differentcontract See 25 atypical representativesofaforce-placedhazard U.S.Bank’sOpp’n,ECFNo.200-5at30. is nottypical,U.S.Bankcites(withoutfurther plaintiffs arenottypicalofclaims of arenottypicalbecausehetookouta

That caseinvolvedonlyadetermination that Id. at335.Theplaintiffswereatypical , 155F.3d331,340(4thCir.1998), Id. Unlikethedifferent See Amgen Gooden v. Broussard , 133S.Ct. 4

UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 C 12-02506 LB (ORDER) a defensethatposesthe kind ofdangerthatdefeatstypicality. higher LPFIchargescaused byU.S.BankandASIC’s at issuehereiswhetherU.S.Bankappropriately force-placed backdatedinsuranceandtherelatively atypical andcreatesconflictswithotherclassmembers. ECF No.200-5at32.Thisisa“failuretomitigate” defensethatU.S.Bankargues rendersthem was notreasonabletoignorethe45-daynoticelette (including thoseundertheUCL). that therefundsduringthislitigationarguablywasastrategydidnotmoot the claims it,” atleastwithregardtoaclaim fordamages. class members willsuffer if theirrepresentativeispreoccupiedwithdefenses [or issues] uniqueto by theneedforsubstantialcross-examination onnegativefactsorthatposes“adangerabsent analysis either.Totheextentthatitisadefense, itisnotthekindof defense thatdefeats typicality 2501698, at*10(N.D.Cal.Aug.30,2007).Theattempted refunddoesnotchangethetypicality defend againstclasscertification.” plaintiff challengesawell-establishedcompany policy,adefendantcannotcitepoormanagement to uniform policiesandpracticesofwrongfulFPI, just anotherreasonwhytheFPIwaswronganddoesnotchangePlaintiffs’challengestoalleged plaintiffs arethesame astheinterestsofnamed class.Whether U.S.Bankmade mistakes hereis the claim remains thesame: wrongfulFPI. Theinjuryisthesame. Theinterestsofthenamed lack ofstandingtopursueinjunctiverelief).Thes and theSkelleys. ECF No.206,¶9).Onceitdiscovereditserrors,U.S.BankrefundedtheLPFIchargestoEllsworth lender-placed bymore thanoneyear.”U.S.BankOpp’n,ECFNo.200-5at31(citingWolfe Decl., resulted incoverageeffectivethedayafter45noticeperiodexpires,ratherthanretroactively follow itspolicyregardingtiming oftheplacement oftheFPI.Ifithad,policy“wouldhave classified asbeinginSFHAs. 200-5 at31.ThepointisthatU.S.Bankmade mistakes withboth.Bothhomes wereimproperly Case 3:12-cv-02506-LBDocument250Filed06/13/14Page26of56 Fourth , U.S.BankarguesthatEllsworthandtheSkelleys areatypicalbecausetheyagreethatit

Id. ; see ASIC Opp’n,ECFNo.199at18(arguingthisresultsinmootness anda Id. ; seesupra See Kurihara v.BestBuyCo. 3/21/2014 Order,ECFNo.186at21-25. Statement. Also,withEllsworth,U.S.Bankdidnot See Hanon kickbacks, andbackdating.Also,“[w]herea 26 e differencesdonotaltertypicality.Thenatureof rs warningofimminent FPI.U.S.BankOpp’n, undisclosedkickbackarrangements. Itisnot Id. , 976F.3dat508.Thecourtalreadyheld Thisdoesnotaffecttypicality.What is , No.C06-01884MHP,2007WL See Hanon , 976F.3dat508. UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 C 12-02506 LB (ORDER) following criteriainappointingclasscounsel: adequately representtheinterestsofclass.” class?” (2) willthenamed plaintiffsandtheircounselprosecutetheaction vigorouslyonbehalfofthe the named plaintiffsandtheircounselhaveanyconflictsofinterestwithotherclassmembers, and applies totheclassrepresentativeandcounselrequiresresolutionoftwoquestions:“(1) do representative partieswillfairly andadequatelyprotecttheinterestsof theclass.”Therequirement at *3-5(S.D.Cal.Nov.1,2013)(discussingthedevelopments inthiscase law). relief”); omitted) (section17203“contains.nolanguageofconditionlinkinginjunctiveandrestitutionary wholly independentremedies.” injunctive reliefundersection17203isnotdependentontherighttoseekrestitution;twoare As theCaliforniaSupreme Courtmade clearin apost- even toobtainaninjunction,”he“isnotentitledrestitutionaryrelief.”2006WL 3782902,at*5. See the courtdisagreeswithASIC’sargument thatthisdooms Plaintiffs’UCLclaim forrestitution. brief. SAC, ECFNo.169,¶¶21n.2,34,45-49.Plaintiffsdonotrespondtothisargument intheir reply properties arenolongerlocatedinfloodzones,andWeaver isnolongeraU.S.Bankborrower. backdated LPFIcharges. because theycannotdemonstrate arealorimmediat Case 3:12-cv-02506-LBDocument250Filed06/13/14Page27of56 ASICOpp’nat18.cites action; Rule 23(a)(4)requiresthat,beforeacourtmay certifyaclass,itmust findthat“the ASIC’s reasoningmakes sensetotheextentPlaintiffsseekinjunctivereliefunderUCL.But ASIC’s argument isthatPlaintiffslackArticleIIIstandingontheirinjunctivereliefclaims See generally of claims assertedintheaction; (ii) counsel’sexperience inhandlingclassactions,othercomplex litigation,andthetypes (i) theworkcounselhasdoneinidentifyingorinvestigating potentialclaims inthe 4. AdequacyofRepresentation Hanlon, see alsoMaraventanov.Nordstrom,Inc. 150F.3dat1020.Rule23(g)(4)alsospecifiesthat classcounsel“must fairlyand

Reply, ECFNo.222-4. See ASICOpp’n,ECFNo.199at18.Ellsworth’sandtheSkelleys’ Clayworthv.Pfizer,Inc. Deitz forthepropositionthatwhereaplaintiff“lacksstanding Under Rule23(g)(1)(A),thecourtmust considerthe 27 , No.10-CV-02671JMWMC, 2013 WL 5936183, e threatofbeingforcedtopayforinflatedor Deitz , 49Cal.4th758,790(2010)(citation opinion,however,“therighttoseek See UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 C 12-02506 LB (ORDER) under Rule23(b)(3).The orderaddressesRule23(b)below. classes’ interestsunderRule23(a)(4). members). Given theircommon claims andsharedinterests,Plaintiffsadequately representthe adequate becausetheysufferedthesame injuryandhadnoconflictsofinterestwith theclass class members theyseektorepresent. 2d LawrenceSkelleyDecl.,ECFNo.189-2,¶¶7-8. Allsufferedthesame injuries asthemulti-state 8, ¶18;2dWeaver Decl.,ECFNo.189-3,¶¶7-8; represent theclassmembers’ interestsasiftheyweretheirown. actively withcounseltoprepareand“vigorously”prosecutethecase,havenoconflicts,will U.S. 147,158n.8(1982).Plaintiffsassert,andDefe members willbefairly andadequatelyprotectedintheirabsence.” named plaintiff’sclaim andtheclassclaims aresointerrelatedthattheinterestsofclass 2598819, at*3(N.D.Cal.July5,2012). vigorously andeffectively. this litigationhasrevealed,understandtheapplicablelawandhaverepresentedtheirclients hearing). Counselhaveworkedvigorouslytoidentifyandinvestigatetheclaims inthiscase,and,as including Plaintiffs’counsel,as“models ofexce No. C10-1313WHA (N.D.Cal.Sept.19,2012)(referringtotheattorneysinthatLPFIclassaction, 136, ¶¶28-33; have appointedthem classcounselinforce-placedinsurancecases. significant experienceinprosecutingforce-placedinsurancecases,andothercourtsthisdistrict fairly andadequatelyrepresenttheinterestsof theclass.” Rule 23(g)(1)(B)permits thecourtto“consideranyothermatter pertinenttocounsel’sability Case 3:12-cv-02506-LBDocument250Filed06/13/14Page28of56 Defendants’ onlyargument againstthisresultisthatPlaintiffsarenot adequaterepresentatives As totheadequacyofnamed Plaintiffs,therequirement ismeant toevaluatewhether“the Defendants donotdisputetheadequacyofPlainti (iv) theresourcesthatcounselwillcommit torepresentingtheclass. (iii) counsel’sknowledgeoftheapplicablelaw;and see also

TranscriptofOralArgument at8-9, See InreNetflixPrivacyLitigation See

Hofstetter llent professionals”infinalsettlement approval 28 2d DoneneSkelleyDecl.,ECFNo.189-1,¶¶7-8; ndants donotdispute,thattheyhaveworked , 2011WL 1225900,at*9(findingplaintiffs ffs’ counsel.Plaintiffsretainedcounselwith Hofstetter v.ChaseHomeFinance,LLC , No.5:11-CV-00379EJD,2012WL See Gen. Tel.of See EllsworthDecl.,ECFNo.119- 1stRichterDecl.,ECFNo.

Sw. v.Falcon , 457 , UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 C 12-02506 LB (ORDER) case, despitetheexistence ofindividualquestions. one: itisnotanumerical analysisandinsteadisaqualitative assessment of overridingissuesinthe Guide Fed.Civ.Pro.BeforeTrialCh.10-C§10:412). Thepredominance analysis isapragmatic Servs., Inc. the claim ordefense;andconsidershowtheseissueswouldbe tried.” of actionandaffirmative defenses);thenconsiderstheproofnecessary toestablisheachelement of predominate, theCourtidentifies thesubstantiveissuesrelatedtoplaintiff’s claims (boththecauses Halliburton Co. of course,withtheelements oftheunderlyingcauseaction.” can beresolvedforallmembers oftheclassinasingleadjudication. under Rule23(b)(3)isproperwhencommon questionsrepresentasignificantportionofthecaseand common issuesagainsttheindividualissues. common andindividualissues,” predominance inquirylooksatthosecommon questions,“focusesontherelationshipbetween shows theexistenceofacommon issueoflaworfact. 23(a).” principles thatguidetheRule23(a)commonality analysis,butit“isevenmore demanding thanRule individual issuesinthecase. class treatment “superior”toalternativemethods foradjudicatingthecontroversy? fact “predominate” overquestionsaffectingonlyindividualclassmembers, and(2)is the controversy.”Rule23(b)(3)thusrequirestwoinquiries:(1)docommon questionsoflawor and thataclassactionissuperiortootheravailablemethods forfairlyandefficientlyadjudicating fact common toclassmembers predominate over Case 3:12-cv-02506-LBDocument250Filed06/13/14Page29of56 “Considering whether‘questionsoflaworfact The Rule23(b)(3)predominance inquiryinvolvesweighingandevaluatingthecommon and Under Rule23(b)(3),aclassactionismaintainable if“thecourtfindsthatquestionsoflawor C. Rule23(b)(3)Requirements 1. PredominanceofCommonQuestions Comcast , No.11-CV-01663-JST,2013WL 4029043(N.D.Cal.Aug.5,2013)(citingPrac. , 131S.Ct.2179,2184(2011).“Indetermining whethercommon questions , 133S.Ct.at1432.TheRule23(a)(2)inquiryconcernsonlywhethertheplaintiff

See Hanlon

Dukes , 131S.Ct.at2556.Itinvolvesconsiderationofthesame , 150F.3dat1022,andrequiresthecourttoweigh See Dukes 29 any questionsaffectingonlyindividualmembers, common toclassmembers predominate’ begins, See See Dukes NewbergonClassActions, §4.51(5thEd. , 131S.Ct.at2556.Classcertification Erica P.JohnFund,Inc.v. , 131S.Ct.at2556.The Hanlon Gaudin v.SaxonMortgage , 150F.3dat1022. UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 C 12-02506 LB (ORDER) practices claims regardingFPIthroughagencies ownedbyaffiliatesthatreceivedcommissions for on RICO,FDCPA,andstate lawcontract,breach 3108, 2000WL 1725238, at *1,*3(E.D.Pa.Nov.20,2000)(certifiednationwidesettlement class commissions/kickbacks tobankinconnectionwithFPI); TILA classandCaliforniaUCLbasedontheory ofinflatedchargesand commissions/kickbacks onFPI); covenant ofgoodfaithandfairdealingrelatedto inflatedchargesandunlawful 76 (S.D.Fla.2012)(certifyingFloridaclassoncl taking kickbacksinconnectionwithFPI); (certifying CaliforniaclassassertingbreachofFa kickback theoryand/orinflatedchargesforFPI. common issuespredominate andcertifying class-widerelieftoborrowerswithclaims basedona unfair competition. under statelawsregardingtheimplied covenantofgoodfaithandfairdealing,unjustenrichment, or issues generallyarethesame: werethepracticeslawfulunderstandard mortgage contractor the stateclaims). Thechallenged practicesarethesame, theinsurerASICissame, andthelegal authority fortheFPIcompensation arrangements andbackdating,theretroactivityoflegislation, supra services andapolicypracticeofbackdatingpolicies,resultinginincreasedchargesforFPI. on inflatedchargesthatincludekickbackstoU.S. Mac Uniform Instrument –allegeacommon scheme toforce-placeinsuranceonborrowersandpass subclasses), damages canbeaddressedinindividualhearings,settlement negotiations,orbycreationof were mold andthecontrolunit;thosedifferences couldbeaddressedbysubclassing;differences in issue ofliabilityinaclassactioninvolvingdefectswashingmachines; thetwocentraldefects 2013); Case 3:12-cv-02506-LBDocument250Filed06/13/14Page30of56 These common issueshaveresultedincourts–includingthisdistrictconcludingthat As discussedinthesectiononcommonality, Plaintiffs–allwiththesame FannieMae/Freddie I.B.2, Commonality (listingcommon issuesregardingtheallegedkickbacks,contractual Butler v.Sears,Roebuck&Co. cert. denied

, 134S.Ct.1277(2014). Hofstetter , 727F.3d796,801(7thCir.2013)(findingasingle,central Williams , 2011WL 1225900,at*8, *11(certifyingnational See, e.g.,Lane ofthedutygoodfaith, fraud,andunfair 30 aims ofunjustenrichment andbreachofthe nnie Mae/FreddieMacandFHAform contractsby Bankintheform ofQERsanddiscountedtracking

v. WellsFargoBank,N.A. Hall v.MidlandGroup , 2013WL 3187410,at*8 , 280F.R.D.665,675- , No.CIV.A.99- See UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 C 12-02506 LB (ORDER) faith andfairdealing,unjust enrichment, andunfai issues predominate regardingclaims ofbreach individualized inquiry;(d)thekickbackallegations tether damages totheQERs orinsurancetracking;(c)thebackdatingallegationsrequirean in sixways:(a)variationsstatecontractlawdefeat certification;(b)thedamages theorydoesnot 427999550, at*17(N.D.Cal.Sept.11,2008). customers byabank. involve form contractsandstandardizedpoliciespracticesappliedonaroutinebasisto all cases holdingthatcommonality andpredominance existinform contracts). Jul. 26,2011)(collectingcases); Med. CapitalSecs.Litig. each classmember, theseclaims areparticularlysuitedtoclassdetermination.”). protection insurance;“[d]uetotheuniformity of insurance policies,theexistenceofaroboticsystem, andthebank’spoliciesregardingcollateral issues wouldbedetermined onthebasisof borrowers more thanthecostofinsuranceunderasystem ofkickbacksfrom theinsurer;notedthat 2000) (upholdingcertificationofRICO/fraudcla Brand v.Nat’lBankofCommerce that theinsurancecompany andmortgage servicerbothstoodtobenefitfrom theFPI); at *7-8(N.D.Cal.May20,2010)(certifyingCalif generate commissions); type ofinsuranceandwhetherCountrywideknowi relating toFPIwithcommon issuesaboutwhether *4-5 (E.D.Pa.Oct.8,1997)(certifyingnationwide the placements); Case 3:12-cv-02506-LBDocument250Filed06/13/14Page31of56 U.S. BankandASICnonethelessarguethati This authoritysupportstheconclusionthatcommon questionspredominate when,ashere,they Moreover, courtsroutinelycertifyclassactionsregardingbreachesofform contracts. Robinson v.CountrywideCreditIndus.

See, e.g.,Gutierrezv.WellsFargoBank accord Wahlv.Am.Sec.Ins.Co. , No.SAML10-2145DOC(RNBx),2011WL 5067208,at*3(C.D.Cal. see also , No.99-60167,213F.3d636,2000WL 554193,at*1(5thCir. Motion, ECFNo.190-4at32-33n.17(collectingother terms of theloanagreement, theterms of the theseissuesandtherelativelysmall damages to ndividual issuespredominate overcommon issues ss regardingFPIongroundthatbankcharged 31 contract, breachoftheimplied covenantofgood ornia classtopursueUCLclaim ontheground ngly purchasedinflatedorexpensivepoliciesto r competition; and(f)affirmative defensesrequire the form contractsauthorizedplacement ofthe requireanindividualizedinquiry;(e)individual class onRICOclaims ofmail andwirefraud , No.CIV.A.97-2747,1997WL 634502,at , No.C08-00555RS,2010WL 1881126, , No.C07-5923WHA, 2008WL See see also

In Re UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 and Defendants donot dispute,thatmateriality actuallyisanissueof fact in thosestates(meaning in itschart(NewYorkand Alabama) as stateswhereitisaquestionoflaw. C 12-02506 LB (ORDER) what isareasonable,appropriate,orpermitted loanchargedefeat subclassing. nonetheless militate againstsubclassing;and (iv)whetherdifferencesinstateinterpretationsabout performance; (iii)whetherdifferencesabout theparolevidenceruleandissuesofextrinsic into thetwosubclassestoaccountfordifferences 1 and2(materiality anddamages asanelement) matter; (ii)whetheritis appropriate togroupstates allowed tovarycontractterms. (3) whetherplaintiff’sperformance isanelement ofbreach,and(4)whetherparolevidenceis materiality ofabreachisquestion oflaworf Columbia asameans ofidentifyingthefollowingwayscontractlawscanvary:(1)whether the The summary chartstheelements ofabreachcontractclaim foreachstateandtheDistrictof elements ofacontractclaim thatU.S.Bankfiled. (class definitions listthestates).Plaintiffs cat similar toeitherCalifornia’s contract ECF No.190-4at2-5.Eachclasshastwosubclasses first twochallengetheallegedkickbacks,andthirdchallengesallegedlybackdating.Motion, each ofthefollowingthreetheories:alender-placedclass,QERandbackdatingclass.The regarding claims anddefenses. different contractlaws,asufficientdamage defeat predominance givenPlaintiffs’ identicalmortgage contracts,theabilitytosubclassaddress 199 at15-24.Thenextsectionsaddressthesearguments inorderandconcludethattheydonot an individualizedinquiry. Case 3:12-cv-02506-LBDocument250Filed06/13/14Page32of56 As towhethermateriality ofabreachis questi The nextsectionsaddressthefollowingissuesinthisorder:(i)whetherdifferences Plaintiffs proposethreemulti-state classesonthei a. VariationsInStateContractLaw i. MaterialityandDamagesAsElementofBreach

See U.S.BankOpp’n,ECFNo.200-5at10-23;ASIC See id law orNewMexico’scontractlaw. . s theory,andapredominance ofcommon issues egorize thestatesusinga50-statesurveyof act; (2)whetherdamages areanelement ofbreach;

and theMulti-StateContractClaims 32 in statecontractlawregardingaplaintiff’s See id. on oflaworfact,U.S.Bankidentifiedtwostates r breachofcontractclaim (claim 1),onefor for twocategoriesofstateswithcontractlaws ; DroskeDecl.Ex.10,ECFNo.130-30. Id. Id. ; see supra Plaintiffspointout,

Statement UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 warranties, and‘lemon laws.’” homogenous collectionofcauseswhich includeproductsliability,breachesofexpress andimplied differing remedies basedonstatestatuteor common la (citing demonstrate thecommonality of substantivelawapplicable toallclassmembers.” state lawdonotnecessarilyprecludea23(b)(3) latches oncertainChryslerminivans. 150F.3dat1011.The courtobservedthat“[v]ariationsin upheld anationwidesettlement inaproductsliabilityclassactionrelatedtofaultyrearliftgate Newberg onClassActions,§4.61(5thEd.2013). similar legalregimes, thecourtfindsthatcommon issues predominate ineachsubclass. Because thecontractlawsofvariousstatesarecapablebeingorganizedintogroupswith subclass andtheSkelley(NewMexico-like)subclass. distinction isthebasisforPlaintiffs’proposedsubclasses:Ellsworth/Weaver (California-like) states, anditisnotfortheNewMexico-likestates. property islocated.Plaintiffs’performance isre members’ form mortgage contractsrequireapplica definitions. Maryland, Michigan,NewHampshire, NorthCarolina,andVermont) from theproposedclass the remedies provisionsofthecontracts. Plaintiffs’ performance isanelement oftheclaim –becausetheissueiswhetherU.S.Bankbreached dispute, thatwhetherPlaintiffscommitted amaterial 36 (citingstatecasestosupportthisconclusion). that theycanbeincludedintheEllsworth/Weaver California-likeclass).Motion,ECFNo.190-4at C 12-02506 LB (ORDER) Case 3:12-cv-02506-LBDocument250Filed06/13/14Page33of56 As tostateswheredamages areanelement of Case lawintheNinthCircuitsupportsthisapproach.Forexample, in As towhetheraplaintiff’sperformance isanel Thus, thesepointsdonotdetractfrom thepredominance ofcommon claims. Phillips PetroleumCo.v.Shutts ii. AppropriatenessofSubclassingToAccountForVariationsinStateLaw

Id . at1022-23.Individual claims basedonpersonalinjuryand , 472U.S.797,821-23(1985)).While therewere“slightly Id. (citingcases). action, butclasscounselshouldbepreparedto quired underthecontractlawofCalifornia-like breach,Plaintiffsexcludethosestates(Idaho, Plaintiffsalsopointout,andDefendantsdonot 33 tion ofthecontractlawstatewhere ement ofaclaim forbreachofcontract,theclass See breachisnotanissue–eveninstateswhere w .they[were]localvariantsofagenerally See Droske Decl.Ex.10,ECFNo.130-30.That Motion,ECFNo.190-4at34-35. Hanlon , theNinthCircuit Id. at 1022 See UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 evidence toresolvecontractual ambiguities: Hawaii,Kentucky,Ohio,SouthDakota, and the treatment. with relativelysmall damages, precisely thesortofcontractclaims thatlendsthemselves toclass See Zinser plan togroupthebreachofcontractclassesinto tw variances. would becorrectonremand). different bodiesofstatelaw.” with subclassesforclassmembers indifferentstates,withjuryinstructionsformaterially certify onlyasmaller classofCaliforniaconsumers orinsteadtocertifyaclassmore broadly“but or leasedcertainAcuras. determination thatCaliforniaconsumer protection American HondaMotorCo.,Inc Circuit implicitly approvedtheuseofsubclassingtoaccountforvariationsinstatelaw 148 F.3d283,315(3dCir.1998)).ThatiswhatPl and applyingthem asaunit.’” accounting for“isolatedandrelativelyminor variations”is“‘bygroupingsimilar statelawstogether Mktg. Litig. realistic planfortrialoftheclassclaims.’” significant differencesinapplicablelawwillaris disparities among classmembers from thedifferentstates.” Id. consumer protectionlawswerenotsufficientlysubstantivetopredominate overthecommon claims. wrongful deathwereexcludedfrom theclass,a C 12-02506 LB (ORDER) Case 3:12-cv-02506-LBDocument250Filed06/13/14Page34of56 Plaintiffs’ proposedclass definitionsexcludestat Lane Differences instatelawcanmilitate againstclasscertificationbecausethey“compound the doesnotalterthisanalysis.There,theplaintiffsfailedtoaddressissueofstate-law , 253F.3dat1189.Theseareidenticalform mortgage contractsinvolvingidentical harm See , 270F.R.D.521,529(N.D.Cal.2010)(quoting 2013WL 3187410,at*4.Bycontrast, onthisrecord,Plaintiffsproposearealistic iii. ParolEvidence

Id. Itremanded foradetermination aboutwhetheritwouldbecorrect to Id. Id. , 666F.3d581,594(9thCir.2012).The (expressingnoviewonwhichapproachtoclasscertification at529(quoting In reConsecoLifeIns.Co.LifetrendSalesand nd thustheidiosyncraticdifferencesamong state e, plaintiffsshouldalsopropose‘asuitableand 34 In rePrudentialIns.Co.Am.SalesPrac.Litig. laws couldapplytoallconsumers whopurchased aintiffs proposehere.Andin2012,theNinth o subclassestoaddressdifferencesinstatelaw. es thatdonotpermit courtstoconsiderparol Zinser Zinser , , 253F.3dat1189).Onewayof

253 F.3dat1189.“Where Mazza courtreverseda Mazza v. , UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 in theirterms. breach ofaform employment contract.Thespeci *3, 13-14(N.D.Cal.Apr.2,2012).In See id. determined onaclass-widebasiswhenthe harm isthesame andthecontractterms arethesame. requirements, andtheadmissibility of extrinsicevidence). contract law,includingthedefinitionofbreach,existencecausationanddamages Co. ambiguous terms wouldbeconstruedagainstthedrafter. contracts, courtsinthisdistrictgenerallyholdthatextrinsicevidenceisunlikelytobeimportant, and 02198 RMW, 2010WL 4269259,at*7(N.D.Cal.Oct.25,2010).Also,withidenticalform identify anyextrinsicevidenceorambiguous contractterms. the form contractterms orU.S.Bank’sliabilitybasedonthesetheories,andBankdoes not backdating andkickbacks.Itishardtoseewhatextrinsicevidencewouldberelevantinterpreting contracts, Plaintiffschallenge defeat predominance. Theseareform FannieMae/FreddieMacUniform Instrument mortgage Diversified Contractors,Inc.v.LowerKuskokwimSch.Dist. Id. admits extrinsicevidenceonlywhenacontractisambiguous, andAlaskaappliesamulti-factor test. Gustafson v.BACHomeLoansServicing,LP admits extrinsicevidencewithoutregardtowhetherthereiscontractualambiguity. differences aremeaningful. issue withform contractsofadhesion.Reply, differences instates’parolevidencerulesmatter. Plaintiffsarguethatextrinsicevidenceisnotan n.20. Therestofthestatespermit extrinsicevidence.Thepartiesdisagreeaboutwhetherthe District ofColumbia. C 12-02506 LB (ORDER) Case 3:12-cv-02506-LBDocument250Filed06/13/14Page35of56 (citing , 270F.R.D.521at529(notingConseco’soverstatement Moreover, whenaform contractisatissue,courtsinthisdistricthaveheldthatabreachcanbe On thisrecord,andbasedoncounsel’sargument, thecourtfindsthatthesedistinctionsdonot ; Vedachalam v.TataConsultancyServices,Ltd. Birmingham SteelErectorsv.Haynes Id.

at*11.Thecourtexplained that“where See State LawSummary, ECFNo.130-30;Motion,190-4at35 See Defendants’ uniform FPIpolicies,andtheallegedinjuryis U.S.BankOpp’n,ECFNo.200-5at19.Forexample, California Verdachalam , 294F.R.D.542-47(C.D.Cal.2013)).Alabama ECF No.222-4at16.Defendantsarguethatthe , 816So.2d494,497(Ala.Civ.App.2001); 35 fic amounts varied,butthecontracts wereuniform , thecourtcertified anationalclass alleging , No.C06-0963CW, 2012WL 1110004,at See id.

a form contractofadhesionisatissue, oftheextentanyvariationsinstate , 778P.2d581,583-84(Alaska1989)). Accord Ewertv.eBay,Inc. ; see also

In reConsecoLifeIns. Id. (citing , No.C-07- Alaska UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 “propose aplantomanage differences among states’ lawsregardingtheuseofextrinsicevidence.” certification.” necessary term. purchased loans.Thosecontractshad“numerous material variations”ofthereasonable-and- different form mortgage contractsissued by demonstrate commonality orpredominance for tworeasons. to protectLender’sinterestintheproperty.” breach ofacontractprovisionthatlimited thebankto“thatwhichis‘reasonable’and/or‘necessary’ commonality andpredominance requirements. certification inaFPIcase,findingthattheplain 5 at19-20,n.11.Thosecasesaredistinguishable. support ofitsargument thatpredominance doesnotexisthere. entirely hypothetically),itwouldbenon-individualizedextrinsicevidence. It isnotobviousthatextrinsicevidencewillbeintroducedatall,andbest(andonthisrecord, involving form contractsand,forthereasonsstated Cal. 2011)). 2d 1139,1150(D.Ariz.2012); contract. and “widelyaccept”extrinsicevidencedonotallowparoltovarytheterms ofamortgage Contracts §211(1)-(2). it.’” order to‘effectuatethereasonableexpectations situated, withoutregardtotheirknowledgeorunderstandingofthestandardterms ofthewriting’in the courtwill,wheneverreasonable,interpretagreement ‘astreatingalikeallthosesimilarly C 12-02506 LB (ORDER) Case 3:12-cv-02506-LBDocument250Filed06/13/14Page36of56 The firstcaseis U.S. Banknonethelesscitesrecentcasesdenyingcertificationinforce-placedinsurance In sum, issuesregardingextrinsicevidencedonotnecessarilydefeatpredominance inacase Finally, Plaintiffspointoutthatthosestatessu Id. at*13(quoting See Reply,ECFNo.222-4at16-17(citing Id. Id.

at543-44. “Thesheernumber of theform contractsatissueitselfcounsel[ed]against Gustafson Ewert, Second ,

2010WL 4269259,at*7); 294 F.R.D.at542-47.There,thedistrictcourtdeniedclass Quintera v.AuroraLoanServs. , theplaintiffssoughtto certify anationwideclassbutfailedto the over3,000lendersfrom whom BankofAmerica Id. Id. tiffs’ breachofcontractclaim failedRule23’s of theaveragemember ofthepublicwhoaccepts Thecourtfoundthattheplaintiffsfailedto 36 ch asCaliforniaandArizonathat“freelyadmit” at542.Asinthiscase,theplaintiffsalleged above,donotdefeatpredominance inthiscase. Snyder v.HSBCBank,USA,N.A. see also Id. , 740F.Supp.2d1163,1171(E.D. See at 542-44. U.S.BankOpp’n,ECFNo.200- Restatement (Second)of First , thereweremany , 873F.Supp. UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 maneuvering toshoehorninhisclaim toestablish commonality andtypicality (therebydefeating of theimplied covenantofgoodfaithandfairdea certification ofnationwideclassforstand-alone unj N.A. Plaintiffs’ counselweredisqualifiedbyJudgeAlsup in class members did nothavethesame common c Chase uptothereplacement valueofthepropertyevenwhen the loanbalanceduewasmuch less; and TILAprimarily onissuesregardingcoverageamount, whichallegedlywasforceplacedby breach offiduciaryduty,violationtheanti-ty for claims ofbreachcontract,the 2001-T-33EAJ, 2013WL 436445, at*2,*5(M.D.Fla. not proposeabackdatingsubclass); subclassing toaddressdifferencesinstate Instrument. Finally, Plaintiffs herelimit theclasstothoseborrowerswithidenticalFannieMae/FreddieMac Uniform the contractprovisionsonwhichPlaintiffsrely.” a common courseofconductwithallborrowers,thisdoesnotchangethematerial differencesamong were toomany contractswithtoomany differences FPI tookplacepursuanttoform contractsandpracticesapplieduniformly. By contrast,assummarized aboveintheStatement, thePlaintiffsinthiscaseofferevidencethat alleged uniform treatment wastheforceplacingofinsurancewhenvoluntarylapsed. n.16. Thecourtrejectedtheuniform treatment argument onthegroundthatonlyevidenceof meant thatthey “must believeallof theterms inthecontractsarematerially thesame.” necessary wereclearandunambiguous andthatDefendantstreatedallborrowersidentically,which admissibility of extrinsicevidence. Id. C 12-02506 LB (ORDER) at544. Case 3:12-cv-02506-LBDocument250Filed06/13/14Page37of56 Moreover, the The , No.9:11-cv-81373-DMM,2013WL 139913,at*2,*5-6,(S.D. Fla.Jan.10,2013)(sought Gustafson

Gustafson court wasconcernedthatkeydifferencesinstatecontractlawsincludedthe Gustafson court ultimately rejectedtheuniform argument onthegroundthatthere involved onlyanationwideproposedclassanddidnotpropose seealsoGordonv.ChaseHomeFinance,LLC Id. Plaintiffsrespondedonlythatthewordsreasonableand law regardingbreachofcontractclaims. implied covenantofgoodfaithandfairdealing, ing provisionsoftheBankHoldingCompany Act, ontract; Plaintiffsdidnotproposesubclassing; 37 ling; raisedconcernsabout Plaintiff’scounsel’s Id. , holdingthat“evenifdefendantshadengagedin ust enrichment andaFloridasubclassforbreach Unlikethemany contractsin Lane Feb. 5,2013)(soughtonlynationwideclass ); Kunzelmann v.WellsFargoBank, , No.8:11-cv- Gustafson See id. Id. (alsodid at544 , Id.

UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 states findbackdatingreasonable. Opp’n, ECFNo.200-5at 20.Itprovidesnoexamples permitted loanchargeasitrelatestoQERs,trackingexpenses,orretroactiveplacement. U.S.Bank big enough. states entirelyfrom theirproposedclassdefinitions) istheonethatcourtstickswith.Thecase approach toanalyzingtheform contracts.For extra statesthatallownoextrinsicevidencecouldcomplicate theproceedingsbyrequiringanother all. Thatbeingsaid,assuming thepossibilityof discussed aboveandadvancedbyPlaintiffs.Anditmay bethatextrinsicevidencewillnotfigureat extrinsic evidencethatmight beintroducedinanyeventwouldnotindividualizedforthereasons 190-4 at35n.20.Intheend,andbasedonlyonthisrecord,courtconcludesthattypeof parol evidencelikelywillnotbeanissueandinanyeventindividualized.Motion,ECF No. South Dakota,andtheDistrictofColumbia to exclude parolevidenceentirely(HawaiiandOhiototheCalifornia-likesubclassesKentucky, with thesame mortgage contract,andtheplaintiffsproposedanationwideclass. at *6.Thatreasoningdoesnotapplyhere.Also,the homes, whichwastheonlywaytoascertainclass guess” theplaintiffs’proposedtheoryfordetermining thereplacement valueoftheclassmembers’ plaintiffs’ mortgage contracts. insurance policiesinexcessofthereplacement valueofthehome andtherebybreachedthe contract andTILAviolations.Theplaintiffs’th There, thecourtdeniedamotion tocertifynationwide andstateclassesforclaims allegingbreachof Suntrust Mortg,Inc. adequacy); classdidnothavecommon form c C 12-02506 LB (ORDER) Case 3:12-cv-02506-LBDocument250Filed06/13/14Page38of56 U.S. Bankarguesthatstatecontractlawsdiffe Finally, aremaining issueisthatinafootnote, The nextcasethatU.S.Bankcitestoshowcommon issuesdonotpredominate is iv. OtherVariationsinStateLaws

, No.2:11-cv-02595-JAM-DAD,2013WL 6499250(E.D.Cal.Dec.11,2013). Id. at*5-6.Thecourtrejected“aslittlemore thananeducated Id. at21n.14.Thecasesit citesinthatfootnoteinvolvecourts ontract; Plaintiffdidnotproposesubclasses). theNewMexico-likesubclasses)ongroundthat this reason,Plaintiffs’firstproposal(excludingthe non-individualizedextrinsicevidence,havingafew eory wasthatthedefendantforceplacedhazard 38 r aboutwhatisareasonable,appropriate,or membership withoutindividualizedinquiries. Plaintiffs proposeaddingbackinthestatesthat Gooden excepttosuggestinafootnote thatdifferent class wasnotlimited toborrowers Gooden v. Id. UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 longer atissue. Instead, themodel wouldhave includeddamages stemming from theoriesof liabilitythat wereno model “didnotisolatedamages resultingfrom anyonetheoryof antitrustimpact.” Supreme Courtreversedanordergrantingclasscertification inanantitrustcasewherethe damages defendant’s actionsthatcreatedlegalliability.” 200-5 at22-24. the actionsthatallegedlycreateliability–forecloses predominance. U.S.BankOpp’n,ECFNo. predominance ofcommon questions. argument, andthecourtalreadyheld–at12(b)(6)stagethatitdidnotapply. under amortgage loancontact.Astothefiledratedoctrineargument, U.S.Bankmakes no regulatory schemes, U.S.Bankprovidenoargument a compensation intheirregulatoryscheme,” andthatlawsonthefiledratedoctrinevary. states). Inotherwords,theseopinionssuggest contract claims onpropertieslocated inTenne 0548, 2008WL 2230696,at*3,6,19(S.D.OhioMay28,2008)(analyzingbreachofmortgage from SouthCarolina,OhioandCalifornia); covenant ofgoodfaithandfairdealingclaim Bank, N.A. under themortgage contractsatissueandrelyingoncaselawfrom variousstates); (dismissing allclaims basedonbackdatingallegationsinpartbecausewaspermissible Fargo Bank,N.A. identifying conflictsoflawsissues,apparentlybecausetheydidnotmatter. that rejectedbackdatingclaims onthemerits, exam C 12-02506 LB (ORDER) Case 3:12-cv-02506-LBDocument250Filed06/13/14Page39of56 To prevailonclasscertification,Plaintiffsmust U.S. BankarguesthatPlaintiffs’failuretotetherdamages totheQERsorinsurancetracking– In sum, onthisrecord,thecourtfindsthatvari U.S. Bankalsopointsoutthatstates“specifi , No.11-3236(DSD/JJK),2012WL 2357602,at*5(D.Minn.June20,2012)(analyzing b. WhethertheDamagesTheoryTetherstoQERsorInsuranceTracking Id

, No.C-12-1376EMC,2013WL 3388222,at*6-7(N.D.Cal.July5,2013) . Webb v.ChaseManhattanMortg.Corp. brought underConnecticutlawbyapplyingcase ssee andColoradobyapplyingcaselawfrom various that thedifferencesinstatelawareimmaterial. cally addresskickbacks,commissions, andother Comcast 39 ations instatecontractlawdonotdefeatthe “showthattheirdamages stemmed from the ining contractlawsfrom differentstateswithout bout howthoseaffectaborrower’srighttosue 133S.Ct.at1435.In See Cannonv.Wells Comcast Id. LaCroix v.U.S. , No.2:05-cv- at1431. Id. , the Asto UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 because onecannotassume thatreasonabletrackingexpensesare tied totheamount ofcoverage(a insurance; (2)insurance tracking cannotbeexpressedasapercentofforce placedfloodinsurance members andexpressing thatasapercentageoftheirtotalFPIcharges. records toidentifythetotalamount ofinsurancetrackingexpensesincludedinFPIchargestoclass that wereincludedintheFPIchargestoclassmembers can bedetermined byusingASIC’sbusiness total hazardinsurancecharges. on theamount ofQERpayments allocabletoclassmembers’ floodinsurancecharges,ratherthanto imposed more than60daysafterlapseareunreasonable. Birnbaum Report,ECFNo.162,¶19.Thisisbase billing, thedamages areanyamounts charged 61daysormore afterthelapseincoverage. calculations: retroactivebilling(orbackdating),QERs,andinsurancetracking.First,for with theprovisionofFPI,includingkickbacksandfixedcostsforservicing). 3187410, at*9(statingthatBirmbaum opined thatunl borne byallborrowers. (b) expensesforinsurancetracking,whichareincurredonaportfolio-widebasisandshouldbe Mae andFreddieMactoensurethecontinuousinsurancecoveragerequiredbyNFIA) services toASICthatU.S.Bankwouldnothave ASIC toU.S.BIS(describedbyBirnbaum asaki FPI –multiplied bythetotalamount ofFPI. percent of“unreasonableexpenses”–definedast inflated charge. “credit” ofanychargenotpaid)forunlawfulchargesorexpensesassociatedwithFPI,suchan *9; class-wide basishasbeenacceptedbycourtsinsimilar FPIcases. C 12-02506 LB (ORDER) Case 3:12-cv-02506-LBDocument250Filed06/13/14Page40of56 Also, thetheoryforcalculatingdamages isequivalenttothatin Here, asin U.S. Bankchallengesthismethodology inthreeways:(1)QERs aretiedexclusivelytohazard Plaintiffs’ damages expertisBirnyBirmba Williams , 280F.R.D.at670-71. Lane See Lane

, allegedly See , 2013WL 3187410,at*9. Birnbaum Report,ECFNo.162¶¶9-10;

unreasonable expensesinclude(a)fortheQERspaidby Id. ¶20.Third,thedamages basedoninsurancetrackingexpenses First , aborrowermay assertaclaim for restitution(ora See id. um, andhismethodology forassessingdamages ona alreadyprovidedtomortgage ownerslikeFannie 40 ckback inpartbecauseU.S.BISprovidednoother hose notactuallyassociatedwiththeprovisionof d onBirnbaum’s opinionthatretroactivecharges

Second awful expenseswerechargesnotassociated Id. Second,theQERdamages arebased , Birnbaum calculatesdamages asa See Lane Lane. accord Id. There arethreedamages ¶21. , 2013WL 3187410,at

Lane , 2013WL UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 disagreements aboutdamages calculationsthatdonotdefeatcertification. for an“allnatural”product. plaintiff providednodamages evidenceoranymodel that showedconsumers wouldpayapremium Cal. Jan.7,2014),thecourtdeniedclasscertification inan“allnatural”labelingcasebecausethe that. In expert couldfirstidentify“categoriesofinferior WL 1570035,at*2(N.D.Cal.May2,2012),theexpertcouldcalculatedamages onlyifanother evidence atall.Forexample, in involve eitherassumptions withnoascertainablewaytoprovefactualpremises ornodamages 3187410, at*9.U.S.Bankcitescaseswherecourts be inadequate,thedamages theorywillfail,andtheclasscanbedecertified. certification. of coverageandpaidtheamount perloansetforthintheStatement. through theclassperiod. F.R.D. at545-46,doesnotalterthisresult.There,theFPIchargesandtrackingfeesbothvaried FPI charges,meaning, thediscountwasbuiltintocharge.U.S.Bank’scitationto Plaintiff’s theoryisthatthecostofdiscounted ECF No.162,¶9.IfPlaintiffsprovethis,themethodologies appeartetheredtotheharm. charges forforce-placedfloodinsurancebecauseitwasanintegratedpackage.Birnbaum Report, LPI hazardagreement doesnotalterthefactthatQERspaidbyASICtoU.S.Bankalsoinflated as apackagedeal. conclusory. can calculatethedamage forinsurancetrackingchargefrom ASIC’snormal businessrecordsis variable thatisunrelatedtothecostoftrackingservices);and(3)Birnbaum’s conclusionthathe C 12-02506 LB (ORDER) Case 3:12-cv-02506-LBDocument250Filed06/13/14Page41of56 In sum, thesearenottethering issues.Instead,as Third Second, astowhetheritisunreasonabletietrackingexpensestheamount ofcoverage, First, astotyingQERshazardinsurance,Plaintiffs’theoryisthateverythingwasnegotiated Astiana v.Ben&Jerry’sHomeade,Inc. , Birnbaum’s methodology –acceptedbyothercourtsissufficientlydetailedatclass See See Lane U.S. BankOpp’n,ECFNo.200-5at22-24.

See supra , 2013WL 3187410,at*9; Id. Bycontrast,inthiscase,U.S.BankchargedPlaintiffs$0.50per$100 Statement, II.Birnbaum opinesthatthecodificationofQERsinan Perez v.StateFarmMut.Auto.Ins.Co. tracking waspassedforwardintheform ofinflated , No.C10-4387PJH,2014WL 60097,at*10(N.D. parts,” andPlaintiffsdidnotidentifyawaytodo 41 Williams rejectdamages methodologies, butthosecases Plaintiffs pointoutintheir replybrief,theyare 280F.R.D.at670-71.Ifitturnsoutto , No.C06-01962JW, 2012 See Leyvav.Medline See Lane Gustafson, , 2013WL 294 UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 in statelawcanbeaddressed bytheproposedsubclassing.Theform mortgage contracts are enrichment, andunfair competition. claims ofbreachcontract,the imp say, afullrefund)wouldbeexcludedfrom theclass. definition herehasbeennarrowedsothatanymi according tostandardpoliciesandprocedures, Bank Opp’n,ECFNo.200-5at15.ButPlainti during theretroactivetime period,suchasareasonforprocessingdelayflood.U.S. includes areasonabletime toaccount foradministrative errorafterthe45-daynotice period. longer than30secondsmust beasolicitation.Here,bycontrast,Plaintiffs identifyatime periodthat putative classmembers, andheproposedaclassdefinitionthatassumed arbitrarilythatanycall prove liability,theplaintiffneededtoshowthatdefendantmade telephonesolicitationstothe second classcertificationmotion inacaseinvolvingtelephonesolicitationstoclassmembers. To 2013), doesnotchangethisconclusion.The record, thecourtfindsthatPlaintiffs’positionappearsreasonable. 5 at4).U.S.Bankarguesthat60dayisarbitr delays or‘holidayperiods.’”Reply,ECFN federal lawrequiresa45-daynoticeperiodandtheextra15daysaretoaccountfor“anypaperwork than 60days. Indus. Inc. C 12-02506 LB (ORDER) Case 3:12-cv-02506-LBDocument250Filed06/13/14Page42of56 As tothebreachofcontract claim, asdiscussedabove,thecommon elements andanyvariations This sectionaddressesU.S.Bank’sarguments thatindividualissuespredominate regarding U.S. Bankarguesthatreasonablenesscouldturnonwhetherextenuatingcircumstances occurred U.S. Bank’scitationto Plaintiffs allegebackdatingclassesforborrowerswhowerechargedFPIbackdatedbymore , 716F.3d510,513-14(9thCir.2013);ReplyBrief,ECFNo.222-4at17. d. WhetherIndividualIssuesPredominateforClaims c. WhethertheBackdatingAllegations See supra

Statement, III,C.Plaintiffschosethatperiodas“reasonable”because Hartman v.UnitedBankCard,Inc. o. 222-4at13(quotingU.S.BankOpp’n,ECFNo.200- ary. US.BankOpp’n,ECFNo.200-5at4.Onthis Hartman lied covenantofgoodfaithandfairdealing,unjust not individualizedinquiries.Also,theclass ffs’ caseisbuiltonDefendants’issuingFPI stakes thatDefendantscaughtlaterandfixed(by, 42 RequireanIndividualizedInquiry courtdeniedamotion forleavetofilea , 291F.R.D.591,597(W.D. Wash.

UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 enrichment/restitution claim alsoremains for borrowerswhere U.S.Bankownsthemortgages. claims. If U.S.Bankmerely servicesaloan,thentheborrowerislimited totheunjust enrichment andUCL servicer (andnottheowner)ofmortgages. unenforceable. dismiss stagegiventhatrestitutionprovidesadifferent avenuefor relief whencontractsare the courtfollowedweightofauthorityinallowing bothclaims togoforwardatthemotion to another characterizationofreliefthatcannotform a contract. Defendants arguedthenthatthetwotheoriesofrecoverywereinconsistentforclaims groundedina claims andunjustenrichment/restitution claims. benefit wouldbeunjust). the defendantknowinglybenefittedattheirexpenseandthatallowingtoretainthis Presbyterian HealthPlan,Inc. another.’”) (quoting plaintiff ‘must pleadreceiptofabenefitandtheunjustretentionatexpense FCD/KJM, 2010WL 1493131,at*12(E.D.Cal.Apr.14,2010)(“tostateaclaim forrestitution,a of abenefitbyDefendantsthatisunjust. defeat thecommon issues. contract. Atbest,theissueisU.S.Bank’sc individual expectationsbecausethose–asdiscussedinthesubclassingsectionarereflected rights andobligationsunderthosecontracts.The faith andreasonablenessisrootedinform contractsandtheapplicationofuniform policiestothe the analysisissame because(whetherthroughCaliforniaorNewMexicolaw),thedutyofgood predominate regardingbreach.Astobreachoftheimplied covenantofgoodfaithandfairdealing, identical, andPlaintiffsallegeuniform polic C 12-02506 LB (ORDER) Case 3:12-cv-02506-LBDocument250Filed06/13/14Page43of56 The undersignedpreviouslyaddressedtheappropriatenessofsimultaneously pleadingcontract As tounjustenrichment, thelawissimilar inCaliforniaandNewMexico:bothrequireretention See See id. Plaintiff’s ReplyBrief,ECF No222- See id. Althoughsome opinionsholdthatastand-aloneunjustenrichment claim isjust

Lectrodryer v.SeoulBank Thatsituationexistsnowforclaims arisingoutofFPIwhenU.S.Bankisthe , 276P.3d252,278(N.M.Ct.App.2011)(plaintiffsmust allegethat See Waltersv.Fid.Mortg.ofCal. onduct andreasonableness,anyissuestheredonot ies andpracticessurroundingFPI.Common issues , 77Cal.App.4th723,726(2000)); See supra See 43 4 at7.Moreover,afallback unjust duty doesnotrequireexamining eachplaintiff’s claim separatefrom abreachofcontractclaim, 12/11/12Order,ECFNo.80at26-27. (narrowingthecontractclassdefinition). , No.2:09-cv-3317 Starko, Inc.v. UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 1689899, at*9-10(N.D.Cal.June11,2007)(antitrust)). 2010) (productsliability); 3187410, at*5(FPI); enrichment claims togoforwardattheclasscertificationstate. issues recitedearlierinthisorder.Plaintiffspoi whether therenonethelessareindividualissuesaboutunjustenrichment thatdefeatthecommon contract andisimplemented underDefendants’common policiesandpractices.Thequestionis remain thesame becausetheabilitytoforceplaceinsurancestems from thecommon mortgage ¶¶ 115-130;Reply,ECF No.222-4at14.Thecommon issuesarethesame andaregrounded inthe arrange forkickbacks. individual issuesdonotdefeatpredominance ontheunjustenrichment claim. borrowers, onthisrecord,andinaccordwithother decisionsinthisdistrict,thecourtfindsthat kickbacks orbackdating,notchoicesthatbuyers make totake aneasyinsuranceoption. ASIC’s Opp’n,ECFNo.199at21-22.Again,thecaseremains about thereasonablenessof what isjustdiffersforbuyerswhoacquiescetoFPIbecauseiteasierthanshoppingaround. borrowers whoknowaboutinsurancetrackingorQERsthanfordonot,andthat require thekindofindividualizedinquirythatdefeatspredominance. tracking coststobuyersintheform ofincreasedcharges.InthecontextFPI,thatinquirydoesnot That beingsaid,thecaseisaboutappropr for someone likeWeaver wholetherinsurance lapse. insurance againstpeople(EllsworthandtheSkelleys)whoarenotinanSFHA,lessinequitable enrichment dependsontheborrower.Forexample, perhapsitismore inequitabletoforce-place No. 200-5at28;ASICOpp’n,ECF19921- C 12-02506 LB (ORDER) Case 3:12-cv-02506-LBDocument250Filed06/13/14Page44of56 Defendants giveexamples ofhowindividualissuespredominate. The common issueswithbackdating andkickbacksinthecontextofanunjustenrichment claim As totheUCLclaim, theissueissimilar: whetheritisunfair forDefendantstobackdateFPIand In sum, giventheclassicclass-widequestions thatcanbeansweredthesame wayforall Less persuasiveareDefendants’arguments that

Keilhotz v.LennoxHearthProds.Inc. See In reAbbottLabs.NorvirAnti-TrustLitig. CaliforniaBusiness&Professions Code§17200;SAC,ECFNo.169, iateness ofbackdatingandpassingalongQERs nt outthatcourtsinthisdistrictallowunjust 44 24. Thebestareexamples ofhowunjust whether apracticeisunjustdifferentfor See U.S. BankOpp’n,ECFNo.200-5at28. , 268F.R.D.330,642-43(N.D.Cal. Id. at14(citing , No.C04-1511CW, 2007WL See U.S. BankOpp’n,ECF Lane , 2013WL See UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 information aboutwhattheborrowerknewiscontainedin U.S.Bank’snoticeswarningofthe Defendants’ contentionthat itisimportant to individual facts.Eitheraborrowerpaidordidnot paythecostthatU.S.Bankpassedon.Asto See typicality andhingesontheargument thatitwasunreasonabletoignorethe45-daynoticesofFPI. Opp’n, ECFNo.199at26-28.Theaffirmative hands, orconsent),settlement andrelease. such asfailuretopay(givingrisepossibledefensesofvoluntarypayment, waiver,laches,unclean policies reneworengagedinmortgage fraudor predominance: thefailure tomitigate damages, thepossibilitythatsome plaintiffs lettheirFPI in theStatement) suggestonlyuniformity ofpolicy andcommon issuesofnotice. to class-wideproof. kickbacks orbackdating.Nothingintherecordsuggeststhatissuesofunfairnessarenotsusceptible borrowers vary,anydifferencesdonotdefeatpredominance becausethe disclosuresdonotreveal individual issuesdonotdefeatpredominance. To are substantial,andissuesofpolicybalancingsusceptibleclass-widedetermination. Any Again, thecaseisaboutappropriatenessofbackdatingandallegedkickbacks,common issues what isunfair.U.S.BankOpp’n,ECFNo. See legislative policy,orwhetherharms outweighutilities,arequestionscapableofclasswideresolution. 1881126, at*8-10.Thesame analysisapplieshere.Whether apracticeisunfairinthecontextof Lane out thatothercourtsinthisdistricthavecer Frannie Mae/FreddieMacmortgage form andtheuni C 12-02506 LB (ORDER) Case 3:12-cv-02506-LBDocument250Filed06/13/14Page45of56 12/11/12Order,ECFNo.80at27-30(discussinganalysisundersection17200). Defendants contendthatthefollowingdefenses Defendants reiteratethatthevariedcircumstances ofclassmembers affectsthedetermination of As forthefailuretomitigate damages defense,itisdiscussedaboveinthesectionaddressing supra , 2013WL 3187410,at*11; Analysis,I.B.3.Thisisnotadefensethatrequires substantialcross-examination on e. WhetherAffirmativeDefensesRequireanIndividualizedInquiry

Allofthemain andrelevantdisclosures(atleastonthisrecord,assummarized Hofstetter tified classesinFPIcasestopursueUCLclaims. 200-5 at28-29;ASICOpp’n,ECFNo.19924-25. , 2011WL 1225900,at*12-14; know whattheborrower knewindividually,themain See defenses donotprecludecertification. breached theirmortgage contracts in otherways 45 U.S.BankOpp’n,ECFNo.200-5at29-30;ASIC the extentthatASICarguesdisclosuresto require anindividualizedinquirythatdefeats form policiesregardingFPI.Plaintiffspoint Wahl , 2010WL See UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 controversy alreadybegun byoragainstclassmembers; (C)thedesirabilityorundesirabilityof prosecution ordefense of separateactions; (B)theextentandnatureof anylitigationconcerningthe superiority includethefollowing:(A)classmembers’ interestsinindividuallycontrollingthe methods forthefairandefficientadjudicationofcontroversy.” not byitsterms preclude classcertification”). American TobaccoCo. even thoughindividualissueswerepresentinoneormore affirmative defenses.”); where common issuesotherwisepredominated, courtshave usuallycertifiedrule23(b)(3)classes simply becauseaffirmative defensesmay beavailableagainstindividualmembers . instead, 2003) (“CourtstraditionallyhavebeenreluctanttodenyclassactionstatusunderRule23(b)(3) methods ofproof. the bank’spurchaseofinsuranceonborrowers’behalf). included inthecostsorbychargingclassmembers forcostsnotactuallyincurred(andwasabout the pointoflawsuitwastochallengeincreasedcostpassedonthem eitherbykickbacks Id. the defensesweresusceptibletocommon methods ofproof.2013WL 2187410,at*8. for FPIallloans,andsentthesame noticesofwarning,whichmeant thatthesuccessorfailureof Wells FargoBank,the imminent placement ofFPI. C 12-02506 LB (ORDER) Thecourtalsodismissed thebank’spossibledefenseofvoluntarypayment onthegroundthat Case 3:12-cv-02506-LBDocument250Filed06/13/14Page46of56 Rule 23(b)(3)requiresacourttoassesswhether class treatment is“superiortootheravailable The same resultmakes sensehereforthesame reasons:thedefensesaresusceptibletocommon summary judgment, basedoncommon methods ofproof. commission), oracceptedthebenefitsofforce-placedinsuranceisamatter fortrial,or commissions, couldhaveavoidedtheforce-placement ofinsurance(andpayment ofthe [Wells Fargo].Whether andtowhatextentclassmembers wereadequatelywarnedofthe for theinsuranceandreceivedapercentofpremium asacommission orkickbackthrough members’ properties;defendantthenchargedclassmembers anallegedlyinflatedpremium notices; defendanteventuallyforce-placedinsuranceprocuredfrom QBEorASIConclass the same form noticeoflapsedinsurance;theyfailedtoactinresponsereceivingmultiple The basicfactsarecommon totheclass:classmembers hadsimilar contractsandreceived In concludingthatthesame defensesdidnotdefeatpredominance inasimilar FPIcaseagainst 2. Superiority

See also

, 522F.3d215,233(2dCir.2003)(“thepresenceofindividualdefensesdoes Lane

Smilow v.SouthwesternBellMobileSys.,Inc. court observedthatthebankappliedsame policesandprocedures 46 Id.

Factors toconsiderinassessing , 323F.3d32,39(1stCir. McLaughlin v. UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 also assertsthattoitsknowledge, noNewMexico multi-state class).U.S.BankOpp’n,ECFNo. 200- (although neitherextendsthatargument to the statesotherthanCaliforniainEllsworth/Weaver New MexicoclassesandtheMexico-likemulti-state subclasseshavenonexustothisdistrict Bank Opp’n,ECFNo.200-5at21.U.S.and AS multi-state subclasses,and theNewMexicoclasses. other thantheCalifornia class:theCalifornia-like multi-state subclasses,theNewMexico-like supra. reason isthatcommon issuespredominate, andtheissuesdo notraisemanageability concerns. related totheborrowersmakes theclassactioninferior. claims). ThecourtalsodisagreeswithDefenda R. Civ.P.23(b)(3)(C) breach oftheimplied contractofgoodfaithandfairdealing,unjustenrichment, andUCL. by oragainstmembers oftheclass. 23(b)(3)(D). Thereapparentlyisnootherlitigationconcerningthecontroversyalreadycommenced Manageability shouldnotbeanissue(andDefendantsdoargueotherwise). 47 (Weaver paid$591).Concentratinglitigationthusmakes senseforefficiencyandeconomy. See individual claims, thecommon theoriesof liability,andtheform contractsandstandardpolicies. profitably onarepresentativebasis. analysis isafocusonefficiencyandeconomy sothatappropriatecasesmay beadjudicatedmost claimants willbeaccordedrelief. when many individualshavesmall damages becauseabsentaclasssuit,itisunlikelythatanyofthe managing aclassaction.Fed.R.Civ.P.23(b)(3). concentrating thelitigationof theclaims intheparticularforum; and(D)thelikelydifficulties in C 12-02506 LB (ORDER) Case 3:12-cv-02506-LBDocument250Filed06/13/14Page47of56 Fed.R.Civ.P.23(b)(3)(A),(C)-(D).;SAC¶¶24,36(EllsworthandtheSkelleyspaid$2,250), The issueregardingsuperiorityisthedesirabilityof aclassactioninthisforum regardingclasses Based onthesefactors,aclassactionissuperiorfortheCaliforniaallclaims: contract, The main factors heremilitating infavor of thesuperiorityof aclassactionarethesmall

; seealsoLane See Amchem Zinser See , 2013WL 3187410,at*12(certifyingsimilar classonFPI Fed. R.Civ.P.23(b)(3)(B). , 253F.3dat1190. , 521U.S.at617.Thepointofthesuperiority nts’ characterizationthattheplethoraofissues 47 Aggregationinaclassactioncanbeefficient court hascertifiedastand-alone claim forunjust 5 at21;ASICOpp’n,ECF No.199at29.ASIC See IC bothcontendthatmembers oftheproposed See ASIC Opp’n,ECFNo.199at30;U.S. ASIC Opp’n,ECFNo.199at29.The See Fed.R.Civ.P. See Fed. See UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 argument attheendofbrief,does notdemonstrate analternativeforum, anddoesnotdefeat settlements andregulatoryinterventionsbythe California Insurance Commissioner). Thisisashort ASIC Opp’n,ECFNo.199at29-30(quotingPlai available andalreadyhaveintervenedinDefendants’ allegedpracticesandaffordedrelief. this record,includingtheNewMexicostateclass doesnotdefeatsuperiority. for thesame reasonsforincludingtheCalifornia classes.Giventhemulti-state subclassing,andon states. Particularlygiventheform contracts,tr argument wouldprecludeanymulti-state classactionsassertingclaims underthelawsofmultiple the rightrecord)“nonexustoforum” argument. Otherwise,the“nonexustoforum” differences instatelaw(andthecaseestablishesthattheycan),thenapproachcantrump (on substantial. Putanotherway,ifmulti-state classescanbecertifiedwithsubclassestoaccommodate Mexico-like classesaremodest, and thesimilarities andcommon issuespredominate andare class wherecommon issuespredominate andthatappearsmanageable. different. Onthisrecord,thecourtconcludesth California federal court.There was nonationalclassandmulti-state contractclass.Thiscaseis differences instatelaw,thecourtcertifiedonlyaCaliforniaclass. See id. nationwide classraisingclaims forviolationof class members wholivedinArkansas. forum,” given thatnoclassmembers wereinArkansas,andtheforum wouldbedisadvantageousto Plaintiffs offered no“adequatejustification for theconcentrationof litigationinthisparticular state claims. 2013WL 3187410, does notown).ASICOpp’n,ECFNo.199at21. enrichment (whichistheonlyclaim forNewMexicoborrowerswhoseloansU.S.Bank servicesbut C 12-02506 LB (ORDER) Case 3:12-cv-02506-LBDocument250Filed06/13/14Page48of56 ASIC alsoarguesthatclassadjudicationisnot In thisform contract case,thedifferencesincontractlawbetweenCalifornia-likeandNew Given thecontextin In Lane at*4-5.Astothecontractclaims, becausetheplaintiffsneveraddressedadequately , acourtinthisdistrictdeniedmotion tocertifyanArkansas classraisingArkansas

Lane , itmade goodsensetodeclinecertifyanArkansasclassina . at*12(quoting Id. In thesame order,thecourtalsodeniedcertificationofa ying theNewMexicoclassclaims heremakes sense the NationalBankHoldingActandcontractclaims. at Plaintiffsproposeaworkablemulti-state contract 48 ntiffs’ submissions regardingnegotiated Zinser necessary becausefederalandstateregulatorsare , 253F.3dat1192).Thereasonwasthat Id. See supra . See UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 subclasses. Theorderalready distinguished determined, thelawregardingcontractclaims doesnotdiffer materially in the multi-state state-specific statutesandclaims thatvarybyju Litig. 976, 984(N.D.Cal.2009)(differentstateunfair competition statutes); consumer protectionandunfair competition laws); Inc. PNC Bank claims orunjustenrichment claims onbehalfofclassmembers inotherstates. national ormulti-state classesonbreach ofcontractclaims). 529; procedures, and(B)subclassingtoaccountforvariationsinstatelaw. stemming from aform contractthatimplicates subclasses isappropriate,particularlywhenthecaseinvolves(A)abreachofcontractclaim (only named plaintiffsmust havestanding). 1013, 1021(9thCir.2011); members instateswithsimilar contractlaws. standing toassertabreachofcontractclaim based state class. gist ofU.S.Bank’sargument isthatthereneedstobeanamed plaintiffforeachstateinmulti- 186 at12-14.EllsworthandWeaver arefrom Califor court previouslyheldthatthenamed plaintiffshadstandingtosue. Mexico. Plaintiffs lackstandingtoassertclaims underth II. MOTIONTODISMISS superiority. C 12-02506 LB (ORDER) Case 3:12-cv-02506-LBDocument250Filed06/13/14Page49of56 The casesDefendantscitedonotcompel adiffere U.S. Bankalsomoves todismiss forlackofsubjectmatter jurisdictiononthegroundthat , No.CV09-8063PSG(CWx), 2011WL 4352458(C.D.Cal.Sept.19,2011)(variousstate see also , 529F.Supp.2d1098,1107(N.D.Cal.2007)(different stateantitruststatutes).Thoseare See , 296F.R.D.389,390-91(W.D. Wash. 2014)(unjustenrichment); See ECFNo.195. Pls.’Opp’n,ECFNo.213at11-12(collectingcaseswherecourtshavecertified ECFNo.197.Thecourtconcludesthatonlythenamed plaintiffsneedtohave

Theonlyclaim atissueisthemulti-state breachofcontractclaim. The Bates v.UnitedParcelServ.,Inc. Gustafson As discussedabove,certificationofmulti-state See, e.g.,Stearnsv.TicketmasterCorp. FPIadministered throughuniform policiesand risdiction. Bycontrast,andasthecourtalready e lawsofstatesotherthanCaliforniaandNew 49 on anidenticalform contractonbehalfofclass Pecover v.ElectonicsArtsInc. nt result.Theygenerallyinvolvestatutory nia. TheSkelleysarefrom NewMexico.The because, among otherreasons, theborrowers , 511F.3d974,985(9thCir.2007) See See Conseco In ReDiptropanXLAntitrust 3/21/2014Order,ECFNo. O’Sheav.EpsonAm., See, e.g.,Laurenv. , 633F.Supp.2d , 270F.R.D.at , 655F.3d UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 (9th Cir.2000).Bycontrast, iftheamendment isconstrued asattachingnewlegalconsequencesto foreclose thebackdating claims inthiscase. true, thentheamendment wouldapplytoallcasespendingatthedateofits enactment and would whatever thatdateis,andevenifisbefore thestartof45-daynoticeperiod.Ifthatis what alwayshasbeenallowed:forceplacinginsurance backtothedateoflapseorinadequacy, inadequacy. U.S.Bankarguesthattheamendment isonly clarifyinglegislationthatmakes explicit 42 U.S.C.A.§4012a(e)(2012)&(2013). it backtothedateoflapse.Theadditionalsentenceisitalicizedandboldedbelow. added onesentencetotheNFIArelatingalender’sabilityforce placeinsuranceandchargefor the insurance. borrower doesnotpurchaseadequateinsurancewithin45days,thelenderorservicercanforceplace the borrower. force-place floodinsuranceonapropertyinanSFHAiftheisnotinsuredadequatelyby can bechargedforbackdatedcoverage. Biggert-Waters amendment) totheNationalFloodInsuranceAct(“NFIA”)clarifiesthatborrowers III. MOTIONFORJUDGMENTONTHEPLEADINGS WL 3187410at*4; the groundthat did notsharethesame form contract. C 12-02506 LB (ORDER) Case 3:12-cv-02506-LBDocument250Filed06/13/14Page50of56 By itsplainlanguage,theamended statutethusallowsFPIback tothedateoflapseor (e) Placement offloodinsurancebylender U.S. Bankmoves forjudgment onthepleadingsgroundthatarecentamendment (the insurance coveragelapsedordidnotprovideasufficientamount. premiums orfeesincurredforcoveragebeginningonthedatewhichflood incurred bythelenderorservicerforloaninpurchasinginsurance, behalf oftheborrowerandmay chargetheborrowerforcostofpremiums andfees under paragraph(1),thelenderorservicerforloanshallpurchaseinsuranceon If theborrowerfailstopurchasesuchflood (2) Purchaseofcoverageonbehalfborrower ... See supra Id.

§4012a(e)(2).Theamendment, whichbecame effectiveonJanuary14,2013, Lane supra plaintiffs’submissions didnotaddressdifferencesinstatelaw. Statement, I;42U.S.C.§4012.Thelendermust givenotice,andifthe Analysis,I.C.1.a.ii. See See 294 F.R.D.at544.Theorderalsodistinguished ECFNo.197.TheNFIAallowsalenderorservicerto See ABKCOMusic,Inc. v. LaVere 50 insurance within45daysafternotification

REGARDING BACKDATING , 217F.3d684,689

including See Lane 2013 on UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 adequate floodinsurance.Butwhilethestatutewasexplicitthatalendermay force-placeinsurance form offorce-placed insurance)kicksiniftheborrowerdoesnotcuresituationbybuying could be:alapseisidentified,anopportunitygiventocurewithin45days,andremedy (inthe beginning ofthe45-daynoticeperiod.Itmade sense ambiguity atbest(beforetheamendment) iswhetherinsurance couldbeforce-placedbacktothe merely clarifiesastatuteincludethefollowing: the law,merely clarifying it. the statutewasmeant toaddressallalong. applied retroactivelyabsentashowingof“unequivocal”Congressintent. Landgraf v.USIFilmProducts, actions completed beforeitsenactment, thenapresumption againstretroactivityapplies. C 12-02506 LB (ORDER) USA, N.A. 456 U.S.512,526-27(1982)). States v.Maciel–Alcala remarks ofthesponsors ofthebill“areanauthoritativeguidetostatute’sconstruction.” and indicationsof alterationomitted). in statutoryconstruction.” Case 3:12-cv-02506-LBDocument250Filed06/13/14Page51of56 Looking atthestatute’splainlanguage,ag theamendment If wasadoptedsoonafteracontroversyaroseconcerningtheproperstatutory • Statements ofthebill’sco-sponsor • Subsequent legislationdeclaringtheintentof anearlierstatute. • amendment “An inthefaceofanambiguous statute.indicatesthatCongressisclarifying, • More specifically,aclarifyingamendment istoanambiguous statute,meaning, itclarifieswhat interpretation. rather thanchanging,thelaw.” 7 6 9 8 1ASutherlandStatutory Construction§22:31(7thed.); While “thestatements ofonelegislator “Subsequentlegislationdeclaringtheintentof anearlier statuteisentitledtogreatweight ABKCO , 654F.3d971,974(9th Cir.2011).

, 217F.3dat689. 9 , 612F.3d1092,1100(9thCir.2010)(quoting Loving v.UnitedStates See id. 511U.S.244,280(1994).Inthatcase,theamendment willnotbe Factorsrelevanttotheinquiryaboutwhetheranamendment 6 8 See

ABKCO made duringdebatemay notbecontrolling,”the 51 ency guidance,andlegislativehistory,the , 517U.S.748,770(1996)(quotations,citations, under thepreviousversionofstatutethatit , 217F.3dat691.Congressisnotchanging McCoy v.ChaseManhattan Bank, 7 N. HavenBd.ofEduc.v.Bell See id. See United , UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 (emphasis added).After consideringthepubliccomments, theOCCstated: Questions &AnswersRegardingFloodInsurance the 45-dayforce-placement noticeperiod. “whether aborrowermay everbe chargedforthecostoffloodinsurancethatprovidescoverage 35914, 35934(July21,2009).InOctober2011,theOCCcharacterized2009questionas OCC, retroactive LPFI.Itsaid: the borrowerreceivednotice.Forexample, inJuly2009,theOCCissued draftguidanceabout coverage duringthe45-daynoticeperiod,notwhetheritcouldberetroactivelyeffectivetobefore backdating waslimited towhetherforce-placedinsurancecanberetroactivelyeffectiveprovide would beachangeinlawandnotclarifyingamendment astothatpractice. To theextentBiggert-Waters Amendment authorizedbackdatingtobeforethenoticeperiod,it retroactively effectivebymore than60days(orbeforethebeginningof45-daynoticeperiod). affect thebackdatingclaims here.Thatisb for coveragethatwasbackdatedtothebeginningof45-daynoticeperiod,thenitwouldnot It saidonlythatthelender“shall”purchaseinsuranceafter45-dayperiod. 45 daysafterthenoticeofinadequacy,itdidnotsay C 12-02506 LB (ORDER) Case 3:12-cv-02506-LBDocument250Filed06/13/14Page52of56 policy andcovertheinterests ofboththeborrowerandlender. pursuant toacontractual right,shouldbeequivalentincoverageandexclusions toanNFIP obtained byalenderorits servicer,thepremium ofwhichischargedtotheborrower for suchcoverageasacontractualconditionofthe loanbeingmade. borrower hasgiventhelenderoritsservicer expressauthoritytochargetheborrower period inwhichnoadequateborrower-purchased floodinsurancecoverageisineffectifthe or itsservicertochargeaborrowerforinsurance coverage answer 62.Asageneralrule,therevisedproposed questionandanswerwouldallowalender In considerationofthecomments received,theAgenciesarerevisingproposedquestionand Agency guidanceandlegislativehistoryconfirm thatthepre-amendment conversationabout The scopeofthediscussionaboutambiguity matters becauseifitwasonlyaboutcharging Notice andRequestforComment:FloodInsuranceQuestions&Answers during the45-daynoticeperiod insurance coverage.Therefore, days afternotificationtotheborrowerof to impose thecostsofforceplacedfloodinsuranceonaborrowercommences 45 placed floodinsurancepolicyuntilthe45-daynoticeperiodhasexpired.Theability There isnoauthorityundertheActandRegulationtochargeaborrowerforforce-

.

lenders may notchargeborrowers forcoverage ”

ecause Plaintiffschallengeonlyinsurancethatis OCC, alackofinsuranceorinadequate 52 , 76Fed.Reg.64175,64180-81(Oct.17,2011) Notice andRequestforComment,Interagency expressly thatitcanberetroactivelyeffective. for anypartofthe45-daynotice Anypolicythatis , 74Fed.Reg. UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 78 Fed.Reg.65108(Oct.30,2013).Therelevant excerptisasfollows: clarification. “clarify” todescribetheamendment, andarguesthatthis showsthattheamendment isonlya nonetheless pointstotheOCC’sproposedrulesimplement theamendment anditsuseoftheword backdating claims toinsuranceforce-placedretroactively61daysormore afternotice.U.S.Bank force-place insurancewithinthe45-daynoticeperiod.Plaintiffsavoidanyissuebylimiting the the 45-saynotice. suggesting thatitwasacceptabletochargeforLPFIbackdatedadatebeforethelendersentout U.S. only aboutbackdatingduringthe45-dayperiod? or inadequacy(evenifthatdatewasbeforethe45-daynoticeperiod),thenwhydiscussion amendment wasintendedtoclarifythatitalwaysokaybackdateFPIthedateoflapse amendment permitted FPIbacktothedateof lapseorinadequacy. If –asU.S.Bankarguesthe of the2011HouseReportforapreviousversionsimilar amendment. TheBiggert-Waters No. 197at5.) added). (U.S.Bankomitted theunderlinedsentenceinitsexcerptofreport. Flood InsuranceReform Actof2011,H.R.112-102,112thCong.§3at*39(2011)(emphasis (that didnotpass),theHouseofRepresentatives’reportsaidfollowing: Id. C 12-02506 LB (ORDER) at64180(emphasis added). Case 3:12-cv-02506-LBDocument250Filed06/13/14Page53of56 not providesufficientcoverage andtoprescribetheproceduresforterminating floodinsurance. incurred forcoveragebeginning onthedatewhichfloodinsurance coveragelapsedordid that regulatedlendinginstitutions may chargea borrowerfor thecostof premiums andfees borrowers aboutprivateinsurance;and](iv)amends theforce-placement requirement to (ii) generallyrequiresescrowof premiums andfees; (iii)directslenderstoacceptandnotify Agencies havejurisdiction.Specifically,theAct: .[(i)increasesthecivilmonetary penalty; the 45-daynotificationperiod circumstance, thelendercancollectfeesandpremiums for“force-placed”insuranceduring Among otherchanges,theAct In sum, totheextentthattherewasambiguity, itwasonlyaboutwhetherpermissible to Thus, thediscussionwasonlyaboutforce-placing existing floodinsurancepolicylapsedordidnotprovidesufficientcoverage.Inthis servicers tocollectpremiums andfeesincurredforcoveragebeginningonthedatean Additionally, thissectionclarifiesandcodifies In 2011,indiscussinganearlierproposedamendment similar totheBiggert-Waters amendment See OfficeoftheComptroller oftheCurrency,

. significantly amends 53 longstandingpracticesthatallowlendersand during the45-dayperiod,evenincontext Bankcitesnoauthorityorlegislativehistory theNFIPrequirements, overwhichthe Joint NoticeofProposedRulemaking See Motion,ECF clarify , UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 Wells FargoBank,N.A. analysis wasnotappropriateforresolutiononamotion todismiss. protect itsinterestsinthecollateralformortgages, andheldthatthe“reasonablenecessary” complied withitscontractualability totake“reasonableandappropriate”or“necessary”actions federal lawdidnotrequirebackdating,notedthatthebankmight beabletoshowthatbackdating because itwasforadifferentbillthatneverpassed. was aclarifyingamendment andaccordedlittlepersuasivevaluetotheHousereportin2011 interpretation. that administrative guidance(includingtheOCC its plainlanguagedidnotrequirebackdatingFPIandchargingborrowersforit. mandated backdating,holdingthatwhilethestatutesuggestedcontinuousinsurancewasnecessary, 24, 2013),thecourtrejectedbank’sargument thattheNFIA’scontinuouscoveragerequirement appropriateness offorce-placinginthe45-daynoticeperiod. guidance andlegislativehistory(includinghist amendment assignificant,thenextsectionsdescribechanges,andpre-amendment agency preamble tothesummary ofthechanges (omitted byU.S.Bankinitsexcerptedquote)describesthe Id. the NFIAbarredpractice.Thecourtheldthat –asamended in2013–itdoesnot. *7. Butbecausetheplaintiffs’mortgage contractspermitted backdating,the issuewasonlywhether Second, thecourtagreedwithanalysisin finding thatplaintiffsdidnotexplainwhyitw Id. court dismissed thebackdatingclaims withprejudiceandlimited thecasetoakickbacktheory. to allpendingcasesand thus barredthebackdatingclaim (giventhat themortgage contract C 12-02506 LB (ORDER) at65110(emphasis added).Theuseoftheword“clarify”doesnotchangeanalysis. at*8.First,thecourtheldthatmortga Case 3:12-cv-02506-LBDocument250Filed06/13/14Page54of56 In Decisions inthisdistrictareconsistentwithinterpretation. The decisionin The Lane v.WellsFargoBank Cannon Id courtalsoheldthatthe2013 amendment wasaclarifyingamendment thatapplied . Andthecourtrejectedargument thatthe2013Biggert-Waters amendment

Cannon , 950F.Supp.2d1093,1112,1119(N.D.Cal.June19,2013). , 2013WL 3388222,at*6-7,doesnotchangetheoutcome. There,the , No.C12-04026WHA, 2013WL 1758878,at*2(N.D.Cal.Apr. Lane ge contractsatissuedidnotprecludebackdating, ould beunreasonabletobackdateinsurance. ory forasimilar amendment) discussonlythe October 2011guidance)supportedthisstatutory 54 thattheNFIAdidnotrequirebackdating. Id. at*3.Insum, thecourtconcludedthat Id. at*3; accord Id. Thecourtnoted

Leghorn v. Id . Id. Id. at*6. at UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 points outthatdamage couldhappen duringthelapseandbecome apparentonlylater. and theOCChavedecided thatitisreasonableandappropriate.Motion, ECFNo.197at9.It incongruous toholdthatretroactiveplacement isunreasonableorinappropriategiventhatCongress (excerpting paragraph9oftheform mortgage contract). Thebankassertsthatitwouldbe lender’s interestintheproperty. mortgage contractspermit lenderstotake stepsthatare“reasonableorappropriate”toprotectthe 1, 2013bymore than60days,theamendment doesnotprecludethebackdatingclaims. within the45-dayperiod.BecausePlaintiffsdefine not retroactive.Ifitisaclarifyingamendment, atmost itwouldbelimited toallowingbackdating No. 238. this matter, counselforU.S.Banksentthecourtaletteracknowledgingthispoint. Id. No. 107.Forexample, onetime lineisasfollows: No. C12-01376EMC;Wells Fargo’sRequestforJ 45-day noticeperiod. report). Thebackdatingallegationsin 45-day notificationperiod.” conclusion thatthelendercan“collectfeesandpremiums for‘force-placed’insuranceduringthe omitted). here –thelanguageiscarriedforwardfrom theunenactedbilltoenactedone. for anunenacted billcanhaverelevancefor thebillthatisenactedultimately, particularlywhen–as Report’s discussionthattheamendment wasaclarifi permitted backdating). C 12-02506 LB (ORDER) Case 3:12-cv-02506-LBDocument250Filed06/13/14Page55of56 U.S. BankalsocontendsthateveniftheBiggert-Waters amendment isnotretroactive,the In sum, therearestrongarguments thattheBiggert-Waters amendment issubstantiveandthus As discussedabove,the2011HouseReport’sdiscussionofamendment supportsonlythe The otherallegationssimilarly allinvolveFPIwithinthe45-dayperiod. /60 Effectivedateofinsurance WF sentNoticeofTemporary FloodInsurancePlacedbyLender. WF sentaNoticeLetter 5/26/06 5/30/06 4/6/06

See Id. SecondAmended Complaint, ECFNo.105, Unlikethe See H.R. 112-102at*39; See U.S. BankMotion,ECFNo.197at9; Cannon Lane court,the involvedonlythebank’schargesforFPIwithin 55 udicial NoticeSupp.MotiontoDismiss, ECF d theirclaims tothosebackdated before January cation. Thereasonisthatthelegislativehistory Cannon supra (quotingafullerexcerptfrom the court creditedthe2011House Cannon v.WellsFargoBank supra Id.

After thehearingin Statement, III Id. See (citations Letter,ECF Id. at n.4 , UNITED STATES DISTRICT COURT For the Northern District of California 28 27 26 25 24 23 22 21 20 19 18 17 16 15 14 13 12 11 10 9 8 7 6 5 4 3 2 1 ae:Jn 3 04______Dated: June13,2014 Plaintiffs’ counselasclasscounsel. the motion toappointEllsworth,Weaver, andtheSkelleysasclassrepresentativestoappoint definitions setforthinthesectionofthisorder. 45-day noticeperiod. Congress’s intenttoprovideblanketpermission tobackdateinsurance,nomatter howfaroutsidethe record, thecourtcannotruleasamatter oflawona12(c)motion that theamendment manifests is retroactivemore than60daysistheexceptionto rule).Underthecircumstances, andonthis assertions aboutitsforce-placement practices. unreasonableness regardingbackdatingFPImore th allegations aboutforce-placement inthe45-dayperiod,Plaintiffsherehavealleged reasonable asamatter oflaw. FPI inthe45-dayperiod,holdingdoesnotmake (citing C 12-02506 LB (ORDER) Case 3:12-cv-02506-LBDocument250Filed06/13/14Page56of This disposesofECFNos.190-4,195,and197. The courtdeniesU.S.Bank’smotion todismiss andmotion forjudgment onthepleadings. The courtgrantsPlaintiffs’ motion for classcertification andcertifies theclasseswith Unlike thePlaintiffs in Cannon , 2013WL 3388222,at*6).Also,eventhoughtheallegationsin

Cannon , whomade noshowingaboutreasonablenessinthecontextof CONCLUSION See supra 56 an 60daysbasedinpartonU.S.Bank’sown United StatesMagistrateJudge LAUREL BEELER that distinction,whichshowsbackdatingis Statement, II.(discussinghowapolicythat See Statement, III.Thecourtalsogrants Cannon areabout