Free Reply to Opposition - District Court of California - California

Case 3:08-cv-03021-JSW

Document 31

Filed 08/22/2008

Page 1 of 10

1 Victor A. Segovia, Esq. Bar No. 146576 The Segovia Law Office 2 712 Bancroft Road, Number 268 Walnut Creek, CA 94598 3 (925) 674-0185; (925) 674-0165 fax 4 For Duarte José Duarte 5 6 7 8 9 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA

THE SEGOVIA LAW OFFICE

712 BANCROFT ROAD NUMBER 268

WALNUT CREEK, C A L I F O R N I A

CASE NO: CV 08-03021 JSW JOSE DUARTE Duarte, Hearing: August 29, 2008 10 vs. Time: 9:00 AM Courtroom 2, 17th Floor THE STANDARD INSURANCE 11 450 Golden Gate Avenue COMPANY, a subdivision of STANCORP, San Francisco, California 12 and DOES 1 THROUGH 50, Defendants 13 DUARTE SECOND REPLY TO 14 OPPOSITION TO STRIKE AND REMAND 15 Mr. JOSE DUARTE objected to and moved to strike STANDARD INSURANCE 16 COMPANY's (SIC) declaration in support of removal. Duarte also motioned for 17 remand based upon the lack of diversity of citizenship of the parties. SIC has 18 corrected whatever mishap plagued its moving papers and now it appears to oppose 19 both motions and among other things proffers new and different declarations. 20 Essentially, SIC wants a second bite at the apple. 21 Further, Duarte notes an odd discovery development. SIC unlawfully issued 22 requests for admissions. Duarte properly declined to respond noting that formal 23 discovery has not yet opened under Federal Rule of Civil Procedure 26. SIC 24 nevertheless seeks to reap some benefit from the unlawful discovery by commenting 25 upon and producing the illegal discovery repartee. Duarte maintains it is improper for 26 SIC to issue or otherwise benefit from any illegal discovery. 27 28 Duarte replies. ARGUMENT
-1­ DUARTE REPLY TO OPPOSITION TO STRIKE AND REMAND; D' ReplyII.doc

94598

Case 3:08-cv-03021-JSW

Document 31

Filed 08/22/2008

Page 2 of 10

1

I.

ORIGINAL DECLARATION LACKS SUBSTANCE

2 SIC relies upon Piazza v. EMPI, Inc., 2008 U.S. Dist. Lexis 28136, (E.D. Cal. 3 February 28, 2008) for the proposition that supplemental declarations are permitted 4 when the originals are "defective in form." However, SIC's initial declaration is not 5 defective in form but rather substance because it is down right inadmissible in every 6 sense of the word. With no offense to Ms. Rebecca J. Jeffrey personally, she is just not capable of 7 8 testifying from firsthand knowledge about the financial affairs of the company and 9 nothing SIC says in its opposition really changes this. She is not a proper witness. 10 And, the business records exception Federal Rule of Evidence 803(6) that SIC 11 relies upon now does not apply because Jeffrey never examined a single business 12 record! Jeffrey admits, "For the facts based on information and belief... I gather 13 information from individuals within the company with such knowledge." Declaration 14 of Rebecca J. Jeffrey In Support of SIC's Notice of Removal at 1:¶2. This is multiple 15 levels of hearsay. Moreover, the business records exception requires further declarations to the 16 17 effect of when the document was created, it was created in the ordinary course of 18 business by a responsible person knowledgeable about the facts therein and required to 19 be accurate. Nothing of the sort appears in Jeffrey's declaration, or in the new 20 declarations for that matter. 21 Jeffrey's declaration lacks substance of any kind because it is inadmissible and 22 she has no firsthand knowledge. Hence supplanting new and different declarations is 23 merely taking another bite of the apple. II. THE COURT MUST MAKE AN INDEPENDENT DETERMINATION 24 OF VALUE OF ITEMS PRAYED 25 SIC and its parent Stancorp concede that the Court must make an independent 26 determination of the value of any potential prayer for punitive damages, attorney's 27 fees, costs, and/or restitution. Duarte discussed this issue in detail in his motion to 28
-2­ DUARTE REPLY TO OPPOSITION TO STRIKE AND REMAND; D' ReplyII.doc

THE SEGOVIA LAW OFFICE

712 BANCROFT ROAD NUMBER 268

WALNUT CREEK, C A L I F O R N I A

94598

Case 3:08-cv-03021-JSW

Document 31

Filed 08/22/2008

Page 3 of 10

1 remand. The Court must determine the likelihood of recovery for each item of 2 damages prayed and what value it may have, while avoiding enunciating a decision 3 pre-judging either party's case. 4 Duarte did not attach a value to each of the items prayed because they are 5 uncertain. However, Duarte did cite $28,800 in his Complaint at ¶91 as the amount in 6 controversy. SIC seems to ignore this claiming the amount in controversy is blank! 7 SIC Opposition at page 6 line 20. But if this were true for argument sake, the Court 8 would be permitted to turn to other documents to make an independent determination 9 of the amount in controversy. "If damages are not clearly specified in the pleadings, 10 the court may rely upon a variety of documents, including written settlement 11 demands.... Settlement letters are `relevant evidence of the amount in controversy if it
THE SEGOVIA LAW OFFICE
712 BANCROFT ROAD NUMBER 268 94598

12 appears to reflect a reasonable estimate of the plaintiff's claim.'" Arellano v. Home 13 Depot U.S.A., Inc., 245 F.Supp.2d 1102, 1106, 1108 (S.D.Cal.2003).) 14 Accepting SIC's non-existent amounts in controversy claim, Duarte proffers a 15 settlement letter repartee indicating a demand to settle for $28,800 and $1,200 going 16 forward to the president of Stancorp but to which SIC replied. Exhibit 1 at page two 17 penult paragraph. Thus, the amount in controversy is $28,800 in arrears and $1,200 18 per month going forward as of the date of commencement. 19 If Duarte prevailed today, the SIC and Stancorp would only be liable for $1,200 20 per month and $28,800 in arrears as of February 1, 2008, the date suit was filed. 21 Therefore, the Duarte's amount in controversy does not meet the statutory minimum 22 for diversity. 23 Further, in attempting to show that the amount in controversy exceeds $75,000, 24 the SIC has underlined the very real probability that Duarte will prevail in his bad faith 25 breach and Business and Professions Code section 17200 claims, entitling him to 26 punitive damages, restitution, and disgorgement of profits. By nature, bad faith breach 27 under California Insurance Code § 790.03(h) and the unfairness prong of Business and 28 Professions Code section 17200 apply to the unfairness of Stancorp's insurance tactics
-3­ DUARTE REPLY TO OPPOSITION TO STRIKE AND REMAND; D' ReplyII.doc

WALNUT CREEK, C A L I F O R N I A

Case 3:08-cv-03021-JSW

Document 31

Filed 08/22/2008

Page 4 of 10

1 in denying Duarte's benefits to age 65 by ignoring the physical beating that caused his 2 PTSD with its physical symptoms and by ignoring that he is disabled under the "any 3 occupation" definition of disabled. It is unfair for the Stancorp to try to hide behind 4 the shell SIC. It is unfair for Duarte to have his choice of situs for litigation taken from 5 him. Duarte did not reach out across state lines to contract with the SIC and Stancorp. 6 His employer retained the Stancorp. The Stancorp and SIC reached out across state 7 lines to make a buck on employees like Duarte. Duarte and millions of employees like 8 him should not have their right to litigate a local contract in a local court taken from 9 them based on the location of the SIC's furniture and art work as claimed by a 10 paralegal's declaration in support of SIC's removal to federal court. III. A WHOLLY OWNED SUBSIDIARY TAKES ON THE CITIZENSHIP 11 OF THE PARENT CORPORATION 12 As a wholly owned subsidiary of Stancorp, SIC takes on the citizenship of its parent. 13 "[A]s wholly owned subsidiaries of Choice One, each of the L.L.C. plaintiffs is 14 deemed to be a citizen of Delaware and New York, the states of which their owner is a 15 citizen." See, e.g., Johnson v. Columbia Properties Anchorage, LP, 437 F.3d 894, 16 899 (9th Cir.2006)("We therefore join our sister circuits and hold that, like a 17 partnership, an LLC is a citizen of every state of which its owners/members are 18 citizens.")." 495 F.Supp.2d 219, 224 (D. Mass 2007). 19 Being wholly owned by a parent company is the predominant fact emphasized in 20 the subsidiary cases. Thusly SIC and Stancorp are one and the same for diversity of 21 citizenship analysis. 22 One Communications is not an alter ego case as urged by SIC. One 23 Communications is purely parent-subsidiary case, wherein ownership by the parent 24 company is the controlling issue.1 Here, SIC does not dispute it is a wholly owned 25 subsidiary of Stancorp. And Stancorp's financial filings to the Security Exchange 26 Commission indicate that SIC exists solely as an income-generating segment within 27 28
-4­ DUARTE REPLY TO OPPOSITION TO STRIKE AND REMAND; D' ReplyII.doc

THE SEGOVIA LAW OFFICE

712 BANCROFT ROAD NUMBER 268

WALNUT CREEK, C A L I F O R N I A

94598

Case 3:08-cv-03021-JSW

Document 31

Filed 08/22/2008

Page 5 of 10

1 the Stancorp and that SIC is entirely controlled by the Stancorp's board of directors 2 and executives (Duarte Remand Motion). There is no evidence that the SIC acts as a 3 corporation independent of the Stancorp. In fact SIC's own financial reports are held 4 by Stancorp and are made public on the Stancorp website2. SIC financial statement 5 claims a cloud upon its financial outlook posed by the concentration of risk in its 6 mortgage operations and land holdings in California. Exhibit 2, SIC Financial 7 Statement page 2(19.10 of actual report) at ¶16.B. Note also that SIC's financial 8 statement cites assets of Stancorp and uses them to notice possible impending high risk 9 exposure in California due to mortgage loans.3 The merging and referencing of each 10 others assets and noting high risk in California there from to SIC, makes each an alter 11 ego of the other. Exhibit 2, SIC Financial Statement page 19.10 at ¶16.B.
THE SEGOVIA LAW OFFICE
712 BANCROFT ROAD NUMBER 268 94598

12

SIC is, therefore, a citizen of California for diversity purposes through its parent

WALNUT CREEK, C A L I F O R N I A

13 Stancorp and there is no evidence to support the SIC's claim that it is an entity 14 independent of the owning corporation. a. Alter Ego Theory Indicates SIC Should Take The Citizenship Of Its 15 Parent Stancorp And Favors Remand To A California Court 16 SIC claims only California law controls the alter ego analysis, but then cites Texas 17 cases like Sapic v. Govt of Turkm 345 F.3d 347 (5th Cir. 2003). If SIC is purely an 18 Oregon corporation, why would Oregon, Texas, or Federal law not be just as valid if 19 not more so than California law in determining alter ego for diversity purposes sake?4 20 SIC only cites conclusory and contradictory rules without offering any factual 21 reasoning or an explanation of the contours of alter ego theory. At page 10, footnote 5, 22 SIC seems to say that there are multiple alter ego tests. Regardless, SIC and Stancorp 23 are one and the same under all of them. 24 25 http://phx.corporate-ir.net/phoenix.zhtml?c=72431&p=irol-reportStatutory. As strictly an insurance company, SIC, itself, does not sell or otherwise trade in mortgage loans. 27 4 For example, Wells Fargo & Co. v. Wells Fargo Express Co., 556 F.2d 406, 422-24 28 (9th Cir. 1977) is an Oregon case. 26
2 3

-5­ DUARTE REPLY TO OPPOSITION TO STRIKE AND REMAND; D' ReplyII.doc

Case 3:08-cv-03021-JSW

Document 31

Filed 08/22/2008

Page 6 of 10

1

b. Under The Multiple Factor Test SIC Is The Alter Ego Of The Stancorp

2 Powers v. Fox Television 907 F.Supp 719 (SDNY 1995) provides that a subsidiary 3 corporation is the alter ego of the parent company if certain factors are satisfied. 4 Plaintiff need not satisfy all of the facts to show an alter ego relationship exists to 5 warrant remand based on the citizenship of the parent company. Those factors include: (1) the absence of the formalities and paraphernalia that are part and parcel of the corporate existence, i.e. issuance of stock, election of 6 directors, keeping of corporate records and the like, (2) inadequate capitalization, (3) whether funds are put in and taken out of the 7 corporation for personal rather than corporate purposes, (4) overlap in ownership, officers, directors, and personnel, (5) common office space, 8 address and telephone numbers of corporate entities, (6) the amount of business discretion displayed by the allegedly dominated corporation, (7) 9 whether the related corporations deal with the dominated corporation at arms length, (8) whether the corporations are treated as independent profit 10 centers, (9) the payment or guarantee of debts of the dominated corporation by other corporations in the group, and (10) whether the 11 corporation in question had property that was used by other of the corporations as if it were its own. Id. at 724-725 12 13 Factors 1, 2, 4, 5, 6, 7, 8, 9, and 10 favor establishing SIC as the alter-ego of Stancorp. 14 SIC does not issue stock, does not elect it's own directors (the Stancorp's directors 15 entirely run SIC (Duarte Motion Remand Exhibit 2)) and does not keep separate 16 records. In fact whatever records SIC has are entirely held and controlled by the 17 Stancorp. 18 The Stancorp underwrites all of its insurance activities because SIC has no 19 capital: The Standard is a service mark of StanCorp and its subsidiaries and is used as a brand mark and marketing name by Standard and The Standard 20 Life Insurance Company of New York. We have the authority to underwrite insurance products in all 50 states. Exhibit 2 to Duarte 21 Remand Motion at p.3, 4. 22 The Stancorp reference long-term disability reserves of SIC and therefore controls the 23 reserves, the reinvestment of reserve money, and the use of assets from other segments 24 to underwrite and guarantee that the insurance benefits under the policies are paid out: A substantial portion of our insurance subsidiaries' policy liabilities result 25 from long term disability reserves that have proven to be very stable over time, and annuity products on which interest rates can be adjusted 26 periodically, subject to minimum interest rate guarantees. Policyholders or claimants may not withdraw funds from the large block of disability 27 reserves. Instead, claim payments are issued monthly over periods that may extend for many years. Holding these stable long-term reserves 28
-6­ DUARTE REPLY TO OPPOSITION TO STRIKE AND REMAND; D' ReplyII.doc

THE SEGOVIA LAW OFFICE

712 BANCROFT ROAD NUMBER 268

WALNUT CREEK, C A L I F O R N I A

94598

Case 3:08-cv-03021-JSW

Document 31

Filed 08/22/2008

Page 7 of 10

1 2 3 4 5 6 7 9

makes it possible to allocate a significant portion of invested assets to long-term fixed-rate investments, including commercial mortgage loans. The ability to allocate a significant portion of investments to commercial mortgage loans, combined with StanCorp Mortgage Investors' unique expertise with respect to its market niche for fixed-rate commercial mortgage loans, allows us to enhance the yield on the overall investment portfolio beyond that available through fixed maturity securities with an equivalent risk profile. See Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations-- Liquidity and Capital Resources--Investing Cash Flows" and Item 8, "Financial Statements and Supplementary Data-- Notes to Consolidated Financial Statements." Stancorp holds the purse strings for SIC, which is basically a shell insurance SIC is not treated as an independent profit center but rather a core profit source

8 corporation. 10 for Stancorp or "segment" which the Stancorp uses to determine and pay out 11 dividends. Duarte Remand Motion.
THE SEGOVIA LAW OFFICE
712 BANCROFT ROAD NUMBER 268 94598

12

Also, in its annual report, SIC claims that its future profitability is determined by

WALNUT CREEK, C A L I F O R N I A

13 its mortgages and landholdings in California in "INFORMATION ABOUT 14 FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND 15 FINANCIAL INSTRUMENTS WITH CONCENTRATIONS OF CREDIT RISK": 16 17 18 19 20 21 22 23 24 25 26 27 28 Commercial mortgage loans in California represent a concentration of credit risk at 30.2% of our commercial mortgage loan portfolio at December 31, 2007. Due to this concentration, we are exposed to potential losses resulting from the risk of an economic downturn in California as well as to certain catastrophes, such as earthquakes, that may affect the region. Although we diversify our commercial mortgage loan portfolio within California by both location and type of property in an effort to reduce earthquake exposure, such diversification may not eliminate the risk of such losses. (Exh. 2, p. 19.10). Even more telling is the SIC's claim in its annual report that the sale of Stancorp's securities affects its financial outlook, "SALE, TRANSFER AND SERVICING OF FINANCIAL ASSETS AND EXTINGUISHMENTS OF LIABILITIES" (Exh. 2, p.1910). SIC does not issue stock so it must be referring to Stancorp's stock. SIC uses Stancorp's property as its own. Under the multiple factor test enunciated in Arellano v. Home Depot SIC is the alter ego of the Stancorp, whose massive landholdings make it a citizen of California

-7­ DUARTE REPLY TO OPPOSITION TO STRIKE AND REMAND; D' ReplyII.doc

Case 3:08-cv-03021-JSW

Document 31

Filed 08/22/2008

Page 8 of 10

1 for diversity purposes. c. Even Under The Cases SIC Cites It Should Be Found To Be The Alter 2 Ego Of The Standcorp 3 SIC relies on American Tel. & Tel. Co. v. Compagnie Bruxelles Lambert 94 F.3d 586, 4 591 (9th Cir. 1996) for the proposition that only two factors are needed to find an alter 5 ego relationship between parent and subsidiary: unity of interest and ownership, and 6 fraud or injustice. The facts from AT&T are distinguishable. AT&T filed suit against 7 GBL Lambert and claimed that GBL was the alter ego of another company, Keystone. 8 The AT&T court explained: 9 GBL submitted affidavits from Rene Van Achter, a GBL employee who sat on Keystone's board of directors, stating that GBL conducted no 10 business in the United States and had no direct involvement in operating Keystone's Bakersfield facility, and that no GBL or LBC employee was 11 involved in Keystone's day-to-day affairs. GBL's indirect ownership of Keystone stock involved no contacts with California; Van Achter attended 12 no meetings in California... Id at 589. 13 As stated above, unlike the facts of GBL and Keystone, Stancorp owns SIC as the 14 wholly owned subsidiary, Stancorp's board controls SIC, Stancorp siphons off the 15 assets of SIC, Stancorp underwrites the activities of SIC, SIC claims the assets of 16 Stancorp as it's own, etc. That is total control and unity of interest. 17 As mentioned, it is unfair for Stancorp and SIC to deny Duarte access to his 18 local courts to litigate a local contract. Thus, under AT&T, Stancorp and SIC are the 19 alter ego of one another, whereby SIC takes the citizenship of the parent company 20 Stancorp. 21 IV. STANCORP BUSINESS ACTIVITIES PREDOMINATE IN CALIFORNIA MAKING IT A CALIFORNIA CORPORATION FOR 22 DIVERSITY PURPOSES 23 Stancorp's presence in California makes it a California corporation for diversity 24 purposes. The two principal factors are number of employees in the target state vs. 25 any other, and the number of land holdings in the target state. Arellano v. Home Depot 26 U.S.A., Inc., 245 F.Supp.2d 1102, 1107-1108 (S.D.Cal.2003). The Court in Arellano 27 applied citizenship tests based on the characteristics of the business entity: 28 Arellano relies heavily on the holding in Tosco, but that case is
-8­ DUARTE REPLY TO OPPOSITION TO STRIKE AND REMAND; D' ReplyII.doc

THE SEGOVIA LAW OFFICE

712 BANCROFT ROAD NUMBER 268

WALNUT CREEK, C A L I F O R N I A

94598

Case 3:08-cv-03021-JSW

Document 31

Filed 08/22/2008

Page 9 of 10

1 2 3 4 5 6 7 8 9 10 11
THE SEGOVIA LAW OFFICE
94598 712 BANCROFT ROAD NUMBER 268

distinguishable from the present case. In Tosco, the court held that California contained a substantial predominance of the plaintiff's business activities, where the corporation had 21% of its total workforce in California, received 40% of its total refining capacity from California, and had 37% of its retail locations in California. Tosco, 236 F.3d at 500-01. In arguing that California was not its principal place of business, Tosco erroneously compared its activities in California to its activities in the entire United States. Here, conversely, Home Depot provided the court with a comparison between California and other individual states. More importantly, the proportion of Home Depot's business activities in California is much less than that of the corporation in Tosco. Id. Duarte has established from Stancorp's 10k form submitted to the SEC that independent contractors scattered about 41 states handle its operations. Duarte Remand Motion Exhibit 2, p5-6. That SIC now offers declarations contradicting their 2007 report to the SEC leads us to ask which is correct, the Form 10K or the Declaration of Molly Amano. "Another factor courts consider in determining `substantial predominance' is the location of the defendant's tangible property." Id. In Arellano, the Home Depot's property did not justify a finding of California citizenship because it had land holdings of "$629 million in Georgia, $604 million in Texas, and $408 million in California." Id. There is no dispute that the Stancorp's 12 billion dollars worth of land holdings in California, dwarfing all others, make California its predominant place of business Duarte Remand Motion. Stancorp is a Citizen of California along with its subsidiary SIC. V. THE PARENT COMPANY IS ALWAYS LIABLE FOR THE ACTS OF THE AGENT

12 13 14 15 16 17 18 19 20

WALNUT CREEK, C A L I F O R N I A

21 The liability of the parent company for the acts of the agent are independent of and do 22 not depend on the atler ego theory as explained by SIC's case United States v. Best 23 Foods. "The fact that a corporate subsidiary happens to own a polluting facility 24 operated by its parent does nothing, then, to displace the rule that the parent 25 "corporation is [itself] responsible for the wrongs committed by its agents in the course 26 of its business." United States v. Best Foods, 524 US 51, 65 (US 1998). This is an 27 issue that cannot be ignored and will resurface upon a motion to amend naming 28 Stancorp along with SIC.
-9­ DUARTE REPLY TO OPPOSITION TO STRIKE AND REMAND; D' ReplyII.doc

Case 3:08-cv-03021-JSW

Document 31

Filed 08/22/2008

Page 10 of 10

1

CONCLUSION

2 Supplemental declarations are not permitted where the original lacks substance. And 3 in any event, the supplemental declarations are also equally defective and otherwise 4 not permitted. The Court must make an independent valuation and evaluation of the likelihood 5 6 that Duarte may recover on each item prayed. Duarte cited $28,800 in his Complaint 7 at ¶91 as the amount in controversy and here proffers a settlement repartee to boost 8 that claim. Therefore, the amount in controversy does not exceed $75,000. Due to billions of dollars in land holding in California, Stancorp is a citizen of 9 10 California for diversity purposes. SIC is likewise a citizen of California because it is 11 an alter ego of Stancorp.
THE SEGOVIA LAW OFFICE
712 BANCROFT ROAD NUMBER 268 94598

12

Finally, there is the equity argument that merits against diversity in this case.

WALNUT CREEK, C A L I F O R N I A

13 Duarte never reached out to Oregon to do business with SIC or Stancorp. No. Duarte 14 merely accepted a California government job! It would be patently unfair to Duarte 15 and millions of others Californians similarly situated who, unbeknownst to them, have 16 been deprived of seeking redress in their own courts by the efforts of their employer to 17 provide them benefits through an insurance company holding billions of California 18 assets and business but denies citizenship here by where it hangs its artwork. 19 It is SIC who in a-round-about-way came to California to do business with 20 Duarte, not the other way around. So Duarte should be allowed to seek redress of a 21 government employment matter in state court. 22 24 25 26 27 28
- 10 ­ DUARTE REPLY TO OPPOSITION TO STRIKE AND REMAND; D' ReplyII.doc

For the above reasons, Duarte prays his motions to strike and for remand are

23 granted. August 22, 2008 The Segovia Law Office /s/Victor A. Segovia Counsel to Duarte

Case 3:08-cv-03021-JSW

Document 31-2

Filed 08/22/2008

Page 1 of 5

Exhibit 1

Case 3:08-cv-03021-JSW

Document 31-2

Filed 08/22/2008

Page 2 of 5

Exhibit 1

Case 3:08-cv-03021-JSW

Document 31-2

Filed 08/22/2008

Page 3 of 5

Exhibit 1

Case 3:08-cv-03021-JSW

Document 31-2

Filed 08/22/2008

Page 4 of 5

Exhibit 1

Case 3:08-cv-03021-JSW

Document 31-2

Filed 08/22/2008

Page 5 of 5

Exhibit 1

Case 3:08-cv-03021-JSW

Document 31-3

Filed 08/22/2008

Page 1 of 3

LIFE AND ACCIDENT AND HEALTH COMPANIES - ASSOCIATION EDITION

ANNUAL STATEMENT
FOR THE YEAR ENDED DECEMBER 31, 2007 OF THE CONDITION AND AFFAIRS OF THE

NAIC Group Code Organized under the Laws of Country of Domicile Incorporated/Organized Statutory Home Office

1348

Standard Insurance Company
1348 NAIC Company Code 69019
(Prior)

Employer's ID Number

93-0242990 Oregon

(Current)

Oregon

, State of Domicile or Port of Entry United States of America

02/24/1906 1100 Southwest Sixth Avenue (Street and Number) ,

Commenced Business

04/12/1906 Portland , OR 97204-1093 (City or Town, State and Zip Code)

Main Administrative Office Portland , OR 97204-1093 (City or Town, State and Zip Code) Mail Address PO Box 711 (Street and Number or P.O. Box)

1100 Southwest Sixth Avenue (Street and Number) ,

971-321-7000 (Area Code) (Telephone Number) Portland , OR 97207-0711 (City or Town, State and Zip Code)

,

Primary Location of Books and Records Portland , OR 97204-1093 (City or Town, State and Zip Code) Internet Website Address Statutory Statement Contact [email protected] (E-mail Address) Will Fundak (Name)

1100 Southwest Sixth Avenue (Street and Number) ,

971-321-7550 (Area Code) (Telephone Number)

www.standard.com , , 971-321-7550 (Area Code) (Telephone Number) 971-321-7540 (FAX Number)

OFFICERS
President & Chief Executive Officer Corporate Secretary Eric Edmond Parsons Holley Young Franklin JD Controller Corporate Actuary Robert Michael Erickson CMA # Sally Ann Manafi FSA

OTHER DIRECTORS OR TRUSTEES
Frederick William Buckman Wanda Gayle Henton Eric Edmond Parsons Michael Glenn Thorne

Virginia Lynn Anderson Stanley Russel Fallis Jerome Jurgen Meyer Esther Kay Stepp State of County of Oregon Multnomah

John Edgar Chapoton Peter Ogden Kohler MD Ralph Randall Peterson Ronald Ernest Timpe

SS:

The officers of this reporting entity being duly sworn, each depose and say that they are the described officers of said reporting entity, and that on the reporting period stated above, all of the herein described assets were the absolute property of the said reporting entity, free and clear from any liens or claims thereon, except as herein stated, and that this statement, together with related exhibits, schedules and explanations therein contained, annexed or referred to, is a full and true statement of all the assets and liabilities and of the condition and affairs of the said reporting entity as of the reporting period stated above, and of its income and deductions therefrom for the period ended, and have been completed in accordance with the NAIC Annual Statement Instructions and Accounting Practices and Procedures manual except to the extent that: (1) state law may differ; or, (2) that state rules or regulations require differences in reporting not related to accounting practices and procedures, according to the best of their information, knowledge and belief, respectively. Furthermore, the scope of this attestation by the described officers also includes the related corresponding electronic filing with the NAIC, when required, that is an exact copy (except for formatting differences due to electronic filing) of the enclosed statement. The electronic filing may be requested by various regulators in lieu of or in addition to the enclosed statement.

Eric Edmond Parsons President & Chief Executive Officer

Robert Michael Erickson, CMA Controller a. Is this an original filing? b. If no, 1. State the amendment number 2. Date filed 3. Number of pages attached

Holley Young Franklin Corporate Secretary Yes [ X ] No [ ]

Subscribed and sworn to before me this 19th day of

February 2008

Jessica Durand Notary Public 04/03/2010

Exhibit 2

Case 3:08-cv-03021-JSW

Document 31-3

Filed 08/22/2008

Page 2 of 3

ANNUAL STATEMENT FOR THE YEAR 2007 OF THE STANDARD INSURANCE COMPANY

NOTES TO FINANCIAL STATEMENTS
2) Leases having initial or remaining non-cancelable lease terms in excess of one year At January 1, 2008, the minimum aggregate rental commitments are as follows: (Dollars in thousands) Year Ending December 31 2008 2009 2010 2011 2012 Thereafter Total Amount $ 15,748 $ 11,279 $ 6,707 $ 4,459 $ 2,543 $ 1,220 $ 41,956

3) The Company is not involved in any sale-leaseback transactions. B. Lessor Leases The Company owns and leases real estate. It is an insignificant part of the business activities. The Company has no leveraged lease transactions. 16. INFORMATION ABOUT FINANCIAL INSTRUMENTS WITH OFF-BALANCE SHEET RISK AND FINANCIAL INSTRUMENTS WITH CONCENTRATIONS OF CREDIT RISK A. Financial Instruments with Off-Balance Sheet Risk None B. Financial Instruments with Concentrations of Credit Risk Our fixed maturity securities totaled $4,852,190,916 at December 31, 2007. Our corporate bond industry diversification targets are based on the Lehman Investment Grade Credit Index, which is reasonably reflective of the mix of issuers broadly available in the market. We also target a specified level of government, agency and municipal securities in our portfolio for credit quality and additional liquidity. The overall credit quality of our fixed maturity investment securities was A- (Standard and Poor's) at December 31, 2007. The percentage of fixed maturity securities below investment grade was 4.1% and 3.6% at December 31, 2007 and 2006, respectively. Should the credit quality of our fixed maturity securities decline, there could be a material adverse effect on the Company's business, financial position, results of operations or cash flows. Commercial mortgage loans in California represent a concentration of credit risk at 30.2% of our commercial mortgage loan portfolio at December 31, 2007. Due to this concentration, we are exposed to potential losses resulting from the risk of an economic downturn in California as well as to certain catastrophes, such as earthquakes, that may affect the region. Although we diversify our commercial mortgage loan portfolio within California by both location and type of property in an effort to reduce earthquake exposure, such diversification may not eliminate the risk of such losses. We do not require earthquake insurance for properties on which we make commercial mortgage loans, but do consider the potential for earthquake loss based upon seismic surveys and structural information specific to each property when new loans are underwritten. Historically, our experience in California has been consistent with our experience in other states. However, if economic conditions in California decline, we could experience a higher delinquency rate on the portion of our commercial mortgage loan portfolio located in California, which could have a material adverse effect on the Company's business, financial position, results of operations or cash flows. 17. SALE, TRANSFER AND SERVICING OF FINANCIAL ASSETS AND EXTINGUISHMENTS OF LIABILITIES A. Transfers of Receivables Reported as Sales None B. Transfers and Servicing of Financial Assets None C. 1) 2) Wash Sales In the course of the Company's asset management, securities may be sold and reacquired within 30 days of the sale date to enhance the Company's yield on its investment portfolio. The details, of NAIC designation 3 or below, of securities sold in 2007 and reacquired within 30 days of the sale are: Bond NAIC 4 Number of Transactions 1 Book Value of Securities Sold 77,686 Cost of Securities Repurchased 77,489 Gain/(Loss) 197

18. GAIN OR LOSS TO THE REPORTING ENTITY FROM UNINSURED PLANS AND THE UNINSURED PORTION OF PARTIALLY INSURED PLANS A. ASO Plans Administration fees from services provided to uninsured and partially insured A&H (disability income) plans were $8,032,470. Expenses were not segregated. The net gain or loss from administrative services contracts was considered immaterial.

19.10

Exhibit 2

Case 3:08-cv-03021-JSW

Document 31-3

Filed 08/22/2008

Page 3 of 3

ANNUAL STATEMENT FOR THE YEAR 2007 OF THE STANDARD INSURANCE COMPANY

SCHEDULE T - PREMIUMS AND ANNUITY CONSIDERATIONS
Allocated by States and Territories
Life Contracts 2 Is Insurer Licensed? (Yes or No) 3 1 Direct Business Only 4 5 Accident and Health Insurance Premiums, Including Policy, Membership Other and Other Fees Considerations 6 7

1. 2. 3. 4. 5. 6. 7. 8. 9. 10. 11. 12. 13. 14. 15. 16. 17. 18. 19. 20. 21. 22. 23. 24. 25. 26. 27. 28. 29. 30. 31. 32. 33. 34. 35. 36. 37. 38. 39. 40. 41. 42. 43. 44. 45. 46. 47. 48. 49. 50. 51. 52. 53. 54. 55. 56. 57. 58. 59. 90. 91. 92. 93. 94. 95. 96. 97 98. 99. 5801. 5802. 5803. 5898. 5899. 9401. 9402. 9403. 9498. 9499.

Alabama AL Alaska AK Arizona AZ Arkansas AR California CA Colorado CO Connecticut CT Delaware DE District of Columbia DC Florida FL Georgia GA Hawaii HI Idaho ID Illinois IL Indiana IN Iowa IA Kansas KS Kentucky KY Louisiana LA Maine ME Maryland MD Massachusetts MA Michigan MI Minnesota MN Mississippi MS Missouri MO Montana MT Nebraska NE Nevada NV New Hampshire NH New Jersey NJ New Mexico NM New York NY North Carolina NC North Dakota ND Ohio OH Oklahoma OK Oregon OR Pennsylvania PA Rhode Island RI South Carolina SC South Dakota SD Tennessee TN Texas TX Utah UT Vermont VT Virginia VA Washington WA West Virginia WV Wisconsin WI Wyoming WY American Samoa AS Guam GU Puerto Rico PR U.S. Virgin Islands VI Northern Mariana Islands MP Canada CN Aggregate Other Aliens XXX OT Subtotal (a) Reporting entity contributions for employee benefits plans XXX Dividends or refunds applied to purchase paid-up additions and annuities XXX Dividends or refunds applied to shorten endowment or premium paying period XXX Premium or annuity considerations waived under disability or other contract provisions XXX Aggregate or other amounts not allocable by State XXX Totals (Direct Business) XXX Plus reinsurance assumed XXX Totals (All Business) XXX Less reinsurance ceded XXX Totals (All Business) less Reinsurance Ceded XXX

States, Etc.

Life Insurance Premiums

Annuity Considerations

Total Columns 2 through 5

Deposit-Type Contracts

DETAILS OF WRITE-INS

(b)

!"#
Summary of remaining write-ins for Line 58 from overflow page Totals (Lines 5801 through 5803 plus 5898)(Line 58 above)

XXX XXX XXX XXX XXX XXX XXX XXX XXX XXX

Summary of remaining write-ins for Line 94 from overflow page Totals (Lines 9401 through 9403 plus 9498)(Line 94 above)

Explanation of basis of allocation by states, etc., of premiums and annuity considerations Individual insurance premiums, annuity and other considerations are allocated to the state to which the premium statements are mailed. Group insurance premiums (for groups with less than 500 lives) are allocated to the state to which the billing statements are mailed. For groups with 500 or more lives, insurance premiums are allocated amoung the states where the insureds reside, based upon data furnished by the policyholder.
(a) Insert the number of yes responses except for Canada and Other Alien. (b) Column 4 should balance with Exhibit 1, Lines 6.4, 10.4, and 16.4, Cols. 8, 9, 10, or with Schedule H, Part 1, Line 1, indicate which:

62

Exhibit 2

$% & ) #!(

'

! (

(

(

Case 3:08-cv-03021-JSW

Document 31-4

Filed 08/22/2008

Page 1 of 6

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-K
È ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the fiscal year ended December 31, 2007
or

`

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from to Commission File Number: 1-14925

STANCORP FINANCIAL GROUP, INC.
(Exact name of registrant as specified in its charter)

Oregon
(State or other jurisdiction of incorporation or organization)

93-1253576
(I.R.S. Employer Identification No.)

1100 SW Sixth Avenue, Portland, Oregon, 97204
(Address of principal executive offices, including zip code)

Registrant's telephone number, including area code: (971) 321-7000 Securities registered pursuant to Section 12(b) of the Act:
TITLE OF EACH CLASS NAME OF EACH EXCHANGE ON WHICH REGISTERED

Common Stock Series A Preferred Share Purchase Rights

New York Stock Exchange New York Stock Exchange

Securities registered pursuant to Section 12(g) of the Act: NONE Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes È No ` Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ` No È Indicate by check mark whether the registrant: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes È No ` Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of the 10-K or any amendment to the Form 10-K. È Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of "accelerated filer and large accelerated filer" in Rule 12b-2 of the Exchange Act. Large accelerated filer È Accelerated filer ` Non-accelerated filer ` Smaller reporting company ` Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ` No È

The aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of June 29, 2007, was approximately $2.75 billion based upon the closing price of $52.48 on June 29, 2007. For this purpose, directors and executive officers of the registrant are assumed to be affiliates. As of February 22, 2008, there were 49,011,892 shares of the registrant's common stock, no par value, outstanding.
DOCUMENTS INCORPORATED BY REFERENCE

Portions of the registrant's definitive Proxy Statement for its 2008 Annual Meeting of Shareholders are incorporated by reference in Parts I and III.

Exhibit 3

Case 3:08-cv-03021-JSW

Document 31-4

Filed 08/22/2008

Page 2 of 6

Part I
Standard participates in a reinsurance and third party administration arrangement with Northwestern Mutual under which Northwestern Mutual group long term and short term disability products are sold using Northwestern Mutual's agency distribution system. Generally, Standard assumes 60% of the risk, and receives 60% of the premiums for the policies issued. If Standard were to become unable to meet its obligations, Northwestern Mutual would retain the reinsured liabilities. Therefore, in accordance with an agreement with Northwestern Mutual, Standard established a trust for the benefit of Northwestern Mutual with the market value of assets in the trust equal to Northwestern Mutual's reinsurance receivable from Standard. The market value of assets required to be maintained in the trust at December 31, 2007, was $218.0 million. Premiums assumed by Standard for the Northwestern Mutual business accounted for 3% of the Company's total premiums for each of the three years 2007, 2006 and 2005. In addition to assuming risk, Standard provides product design, pricing, underwriting, legal support, claims management and other administrative services under the arrangement. Standard maintains a strategic marketing alliance with Ameritas that offers Standard's policyholders more flexible dental coverage options and access to Ameritas' nationwide preferred provider organization panel of dentists. As part of this alliance, Standard and Ameritas entered into a reinsurance agreement that provides for 20% of the net dental premiums written by Standard and the risk associated with these premiums to be ceded to Ameritas. In addition to product-specific reinsurance arrangements, we maintain reinsurance coverage for certain catastrophe losses related to group life and AD&D. This agreement excludes nuclear, biological and chemical acts of terrorism. Through a combination of this agreement and our participation in a catastrophe reinsurance pool discussed below, we have coverage of up to $453.0 million per event. Subsequent to the terrorist events of September 11, 2001, we entered into a catastrophe reinsurance pool with other insurance companies. This pool spreads catastrophe losses on group life and AD&D over 29 participating members. The annual fee paid by the Company in 2007 to participate in the pool was minor. As a member of the pool, we are exposed to maximum potential losses experienced by other participating members of up to $90.9 million for a single event for losses submitted by a single company and a maximum of $227.2 million for a single event for losses submitted by multiple companies. The Company's percentage share of losses experienced by pool members will change over time as it is a function of our group life and AD&D in force relative to the total group life and AD&D in force for all pool participants. The reinsurance pool does not exclude war or nuclear, biological and chemical acts of terrorism. The Terrorism Risk Insurance Act of 2002 ("TRIA"), which has been extended through 2014, provides for federal government assistance to property and casualty insurers in the event of material losses due to terrorist acts on behalf of a foreign person or foreign interest. Due to the concentration of risk present in group life insurance and the fact that group life insurance is not covered under TRIA, an occurrence of a significant catastrophe or a change in the on-going nature and availability of reinsurance and catastrophe reinsurance could have a material adverse effect on the Company.
Asset/Liability and Interest Rate Risk Management

See Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations--Liquidity and Capital Resources--Asset/Liability and Interest Rate Risk Management." INVESTMENTS Investment management is an integral part of our business. Investments are maintained to ensure that asset types and maturities are appropriate for the Company's policy reserves and other liabilities so that we can meet our obligations to policyholders under a wide variety of economic conditions. A substantial portion of our insurance subsidiaries' policy liabilities result from long term disability reserves that have proven to be very stable over time, and annuity products on which interest rates can be adjusted periodically, subject to minimum interest rate guarantees. Policyholders or claimants may not withdraw funds from the large block of disability reserves. Instead, claim payments are issued monthly over periods that may extend for many years. Holding these stable long-term reserves makes it possible to allocate a significant portion of invested assets to long-term fixed-rate investments, including commercial mortgage loans. The ability to allocate a significant portion of investments to commercial mortgage loans, combined with StanCorp Mortgage Investors' unique expertise with respect to its market niche for fixed-rate commercial mortgage loans, allows us to enhance the yield on the overall investment portfolio beyond that available through fixed maturity securities with an equivalent risk profile. See Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations-- Liquidity and Capital Resources--Investing Cash Flows" and Item 8, "Financial Statements and Supplementary Data-- Notes to Consolidated Financial Statements."

10

STANCORP FINANCIAL GROUP, INC.

Exhibit 3

Case 3:08-cv-03021-JSW

Document 31-4

Filed 08/22/2008

Page 3 of 6

important factor in establishing the competitive position of insurance companies. Ratings are important to maintaining public confidence in our company and in our ability to market our products. Rating organizations continually review the financial performance and condition of insurance companies, including our company. A significant ratings downgrade could increase our surrender levels and could adversely affect our ability to market our products and thereby have a material adverse effect on our business, financial position, results of operations or cash flows. · Our profitability may be affected by changes in state and federal regulation--Our business is subject to comprehensive state regulation and supervision throughout the United States. While we cannot predict the impact of potential or future state or federal legislation or regulation on our business, future laws and regulations, or the interpretation thereof, could have a material adverse effect on our business, financial position, results of operations or cash flows. · Our business is subject to litigation risk--In the normal course of business, we are a plaintiff or defendant in actions arising out of our insurance business and investment operations. We are from time to time involved in various governmental and administrative proceedings. While the outcome of any pending or future litigation cannot be predicted, as of the date hereof, we do not believe that any pending litigation will have a material adverse effect on our results of operations and financial condition. However, no assurances can be given that such litigation would not materially and adversely affect our business, financial position, results of operations or cash flows. · The concentration of our investments in California may subject us to losses resulting from an economic downturn as well as certain catastrophes in this state-- Our commercial mortgage loans are concentrated in the western region of the U.S., particularly in California. Due to this concentration, we are exposed to potential losses resulting from the risk of an economic downturn in California as well as to certain catastrophes, such as earthquakes and fires, which may affect the region. Although we diversify our commercial mortgage loan portfolio within California by both location and type of property in an effort to reduce earthquake exposure, such diversification may not eliminate the risk of such losses, which could have a material adverse effect on our business, financial position, results of operations or cash flows.

· We may be exposed to environmental liability from our commercial mortgage loan and real estate investments-- As a commercial mortgage lender, we customarily conduct environmental assessments prior to making commercial mortgage loans secured by real estate and before taking title through foreclosure to real estate collateralizing delinquent commercial mortgage loans held by us. Based on our environmental assessments, we believe that any compliance costs associated with environmental laws and regulations or any remediation of affected properties would not have a material adverse effect on our results of operations or financial condition. However, we cannot provide assurance that material compliance costs will not be incurred by us. · As a holding company, we depend on the ability of our subsidiaries to transfer funds to us in sufficient amounts to pay dividends to shareholders, make payments on debt securities and meet our other obligations--We are a holding company for our insurance and asset management subsidiaries and do not have any significant operations of our own. Dividends and permitted payments from our subsidiaries are our principal source of cash to meet our other obligations, pay dividends to shareholders and make payments on debt securities. As a result, our ability to pay dividends to shareholders and interest payments on debt securities primarily will depend upon the receipt of dividends and other distributions from our subsidiaries. Many of our subsidiaries are non-insurance businesses and have no regulatory restrictions on dividends. Our insurance subsidiaries, however, are regulated by insurance laws and regulations that limit the maximum amount of dividends, distributions and other payments that they could declare and pay to us without prior approval of the states in which the subsidiaries are domiciled. Under Oregon law, Standard Insurance Company may pay dividends only from the earned surplus arising from its business. Oregon law gives the Director of the Oregon Department of Consumer and Business Services--Insurances Division ("Oregon Insurance Division") broad discretion regarding the approval of dividends. Oregon law requires us to receive the prior approval of the Oregon Insurance Division to pay a dividend if such dividend exceeds certain statutory limitations; however, it is at the Oregon Insurance Division's discretion to request prior approval of dividends at any time. See Part II, Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations--Capital Management--Dividends from Subsidiaries."

Exhibit 3
2007 ANNUAL REPORT 13

Case 3:08-cv-03021-JSW

Document 31-4

Filed 08/22/2008

Page 4 of 6

Part I
· Our business may be affected by employment and wage growth--Two factors in the growth of StanCorp's group businesses are the employment levels, and salary and wage growth of its employer groups. A reduction in either of these factors may affect premium levels for our group businesses. · Our profitability may be adversely affected by declining equity markets--Sustained equity market declines could result in decreases in the value of our retirement plans assets under administration, which could reduce our ability to earn administrative fee income derived from the value of those assets. Company leases 66 offices under commitments of varying terms to support its sales and regional processing offices throughout the United States. Management believes that the capacity and types of facilities are suitable and adequate. Management may evaluate additional square footage in 2008 to accommodate its increasing workforce. See Part II, Item 8, "Financial Statements and Supplementary Data--Note 1 to Consolidated Financial Statements."

Item 3. Legal Proceedings
In the normal course of business, the Company is involved in various legal actions and other state and federal proceedings. A number of actions or proceedings were pending as of December 31, 2007. In some instances, lawsuits include claims for punitive damages and similar types of relief in unspecified or substantial amounts, in addition to amounts for alleged contractual liability or other compensatory damages. In the opinion of management, the ultimate liability, if any, arising from the actions or proceedings is not expected to have a material adverse effect on the Company's business, financial position, results of operations or cash flows.

Item 1B. Unresolved Staff Comments
None.

Item 2. Properties
Principal properties owned by Standard Insurance Company ("Standard") and used by the Company consist of two office buildings in downtown Portland, Oregon: the Standard Insurance Center, with approximately 460,000 square feet; and the Standard Plaza, with approximately 220,000 square feet. Both of our business segments use the facilities described above. The Company also owns a building with 72,000 square feet of office space in Hillsboro, Oregon, which is used by StanCorp Mortgage Investors, LLC and our group insurance claims operations. A second building with 72,000 square feet was completed in the first quarter of 2007 and is used by our group operations. In addition, Standard leases 160,000 square feet of office space located in downtown Portland, Oregon, for home office and claims operations and 60,000 square feet of offsite storage. The The following table sets forth the executive officers of StanCorp:
Age (as of February 27, 2008)

Item 4. Submission of Matters to a Vote of Security Holders
There were no matters submitted to a vote of StanCorp's shareholders during the fourth quarter of 2007.

Item 4A. Executive Officers of the Registrant
The information with respect to executive officers is set forth pursuant to General Instruction G of Form 10-K.

Name

Position

Robert M. Erickson Kim W. Ledbetter* J. Gregory Ness* Eric E. Parsons Michael T. Winslow

39 55 50 59 53

Assistant Vice President, Controller and Principal Financial Officer of StanCorp and Standard Insurance Company Senior Vice President, Asset Management Group of Standard Insurance Company Senior Vice President, Insurance Services Group of Standard Insurance Company Chairman, President and Chief Executive Officer of StanCorp and Standard Insurance Company Senior Vice President and General Counsel of StanCorp and Standard Insurance Company

*Denotes an officer of a subsidiary who is not an officer of StanCorp but who is considered an "executive officer" of StanCorp under the regulations of the Securities and Exchange Commission.

14

STANCORP FINANCIAL GROUP, INC.

Exhibit 3

Case 3:08-cv-03021-JSW

Document 31-4

Filed 08/22/2008

Page 5 of 6

Set forth below is biographical information for the executive officers of StanCorp: Robert M. Erickson, CMA, has been assistant vice president and controller of StanCorp and Standard Insurance Company ("Standard") since July 2005. In June 2007, he began fulfilling the duties of the Principal Financial Officer on an interim basis until a successor Chief Financial Officer is in place. Since 2000, Mr. Erickson has held several leadership roles in the Corporate Financial Services division of Standard, most recently as corporate divisional controller of Standard. Kim W. Ledbetter, FSA, CLU, has been senior vice president, Asset Management group of Standard since the Company's segment realignment in January 2006. Since June 2004, Mr. Ledbetter was senior vice president, asset management and individual disability of Standard, which included responsibility for Standard's investment operations, including StanCorp Mortgage Investors, LLC, StanCorp Investment Advisers, Inc., our real estate department, and the individual insurance and retirement plans divisions. Since 1997, Mr. Ledbetter was senior vice president, retirement plans division of Standard.

J. Gregory Ness, LLIF, has been senior vice president, Insurance Services group of Standard since the Company's segment realignment in January 2006. Since April 2004, Mr. Ness was senior vice president, group insurance division of Standard. Since 1999, Mr. Ness was senior vice president, investments of Standard. Eric E. Parsons has been chairman, president and chief executive officer of StanCorp and Standard since May 2004. Prior to this, Mr. Parsons was president since May 2002 and chief executive officer since January 2003. Mr. Parsons was senior vice president and chief financial officer of StanCorp from its incorporation until 2002 and was chief financial officer of Standard from 1998 through 2002. Michael T. Winslow, JD, has been senior vice president and general counsel of StanCorp and Standard since July 2004. Mr. Winslow has also performed the duties of assistant corporate secretary since February 2007. Since 2001, Mr. Winslow was vice president, general counsel and corporate secretary of StanCorp and Standard. Prior to joining StanCorp, Mr. Winslow served as assistant general counsel and chief compliance officer for PacifiCorp.

Exhibit 3
2007 ANNUAL REPORT 15

Case 3:08-cv-03021-JSW

Document 31-4

Filed 08/22/2008

Page 6 of 6

Part II
Item 5. Market for Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
All share information below has been adjusted to reflect the December 9, 2005, two-for-one stock split, affected as a share dividend, of the Company's common stock. StanCorp's common stock is listed on the New York Stock Exchange under the symbol "SFG." As of February 22, 2008, there were 40,630 shareholders of record of common stock. The following tables set forth the high and low sales prices as reported by the New York Stock Exchange at the close of the trading day and cash dividends paid per share of common stock by calendar quarter:
2007 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr 2006 4th Qtr 3rd Qtr 2nd Qtr 1st Qtr

High Low Dividends paid

$46.27 44.29 0.65

$51.68 42.07 --

$55.75 46.22 --

$54.55 47.64 --

High Low Dividends paid

$55.13 49.28 0.72

$52.79 41.44 --

$52.89 46.99 --

$49.82 44.88 --

The declaration and payment of dividends in the future is subject to the discretion of StanCorp's board of directors. It is anticipated that annual dividends will be paid in December of each year depending on StanCorp's financial condition, results of operations, cash requirements, future prospects, regulatory restrictions on the distributions from the insurance subsidiaries, the ability of the insurance subsidiaries to maintain adequate capital and other factors deemed relevant by StanCorp's board of directors. See Item 7, "Management's Discussion and Analysis of Financial Condition and Results of Operations--Capital Management." See also Item 1A, "Risk Factors--As a holding company, we depend on the ability of our subsidiaries to transfer funds to us in sufficient amounts to pay dividends to shareholders, make payments on debt securities and meet our other obligations."

The following graph provides a comparison of the cumulative total shareholder return on the Company's common stock with the cumulative total return of the Standard & Poor's ("S&P") 500 Index, the S&P Life and Health Insurance Index and the S&P Insurance Group Index. The comparison assumes $100 was invested on December 31, 2002, in the Company's common stock and in each of the foregoing indexes, and assumes the reinvestment of dividends. The graph covers the period of time beginning December 31, 2002, through December 31, 2007.

Comparison of Five Year Cumulative Total Return
Among StanCorp Financial Group, Inc., the S&P 500 Index, the S&P Life & Health Insurance Index and the S&P 500 Insurance Group
$300

$250

$200

$150

StanCorp Financial Group, Inc. S & P Life & Health Insurance

$100

$50

S & P 500
$0

S & P 500 Insurance Group

12/02

12/03

12/04

12/05

12/06

12/07

16

STANCORP FINANCIAL GROUP, INC.

Exhibit 3

Case 3:08-cv-03021-JSW

Document 31-5

Filed 08/22/2008

Page 1 of 1

1 Victor A. Segovia, Esq. Bar No. 146576 The Segovia Law Office 2 712 Bancroft Road, Number 268 Walnut Creek, CA 94598 3 (925) 674-0185; (925) 674-0165 fax 4 For Plaintiff Jose Duarte 5 6 IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA

THE SEGOVIA LAW OFFICE

712 BANCROFT ROAD NUMBER 268

94598

7 JOSE DUARTE CASE NO: CV 08-03021 JSW Plaintiff, 8 Hearing: August 29, 2008 vs. Time: 9:00 AM 9 THE STANDARD INSURANCE Courtroom 2, 17th Floor 450 Golden Gate Avenue 10 COMPANY, a subdivision of STANCORP, San Francisco, California and DOES 1 THROUGH 50, 11 Defendants 12 DUARTE CERTIFICATE OF SERVICE ON REPLY: 13 ALL PARTIES RECEIVE SERVICE BY ELECTRONIC MEANS THROUGH THE COURT'S ECF SYSTEM. UNDERSIGN IS NOT AWARE OF ANY OTHER 14 PARTY REQUIRING SERVICE BY OTHER MEANS. On the date below, UNDERSIGN CAUSED TO BE SERVED: 15 DUARTE REPLY TO OPPOSITION TO STRIKE AND REMAND 16 I certify the foregoing is true and correct and that this was executed in Walnut Creek, 17 California on: 18 August 22, 2008 19 20 Service List: Standard Insurance Company 21 22 23 24 25 26 27 28
-1­ DUARTE CERTIFICATE OF SERVICE ON REPLY TO OPPOSITION TO STRIKE AND REMAND; D' ReplyII Cert. Service.doc

WALNUT CREEK, C A L I F O R N I A

The Segovia Law Office /s/Victor A. Segovia Counsel to Plaintiff Katherine Ritchey Jones Day 555 California Street, Floor 26 San Francisco, CA 94104