Contributors The Third Circuit’s decision comes on the heels of other appellate decisions reversing certification of similar totalloss underpayment auto class actions. The court in Sampson v. United Services Automobile Association and Lara v. First National Insurance Company of America concluded that figuring out whether each insured was injured requires individualized inquiries to determine whether such insured was paid actual cash value as required under their policies. Meanwhile, the Third, Fourth, Sixth, and Seventh Circuits have granted insurers’ Rule 23(f ) petitions for interlocutory appeal of other district courts’ orders certifying similar total-loss underpayment class actions. At the same time, the Ninth and Eleventh Circuits recently denied insurers’ Rule 23(f) petitions for interlocutory appeal of orders certifying similar total-loss class actions, while the Tenth Circuit granted an insured’s Rule 23(f) petition appealing an order denying certification. Resolution of these multiple pending class certification appeals risks a circuit split. n Northern District of Alabama Grants Certification in Total-Loss Underpayment Class Action Reynolds v. Progressive Direct Insurance Co., No. 5:22-cv-00503 (N.D. Ala. Apr. 19, 2024), No. 24-90006 (11th Cir. June 14, 2024). On April 3, 2024, the Northern District of Alabama granted certification in a class action brought by insureds alleging they were paid less than the actual cash value as a result of Progressive’s alleged practice of applying a “projected sold adjustment” in its total-loss settlements. The Alabama federal court concluded class certification was appropriate because the alleged practice’s breach of Progressive’s policy was an issue common to the class and the plaintiffs’ damages methodology, under which the adjustment would be excised from the valuation, could be used to make a classwide liability determination. On June 14, 2024, the Eleventh Circuit denied Progressive’s Rule 23(f) petition. Possible Circuit Split Brewing? Third Circuit Narrows Total-Loss Underpayment Auto Class Action Claims Lewis v. Government Employees Insurance Co., No. 22-3449 (3rd Cir. Apr. 2, 2024). On Rule 23(f) review, the Third Circuit partially vacated and partially affirmed the District of New Jersey’s order granting certification in a class action alleging the plaintiffs were paid less than the actual cash value of their totalloss vehicles. The Third Circuit affirmed the district court’s order certifying a class of insureds who alleged the insurer failed to account for taxes and fees in their total-loss settlement offers. However, the Third Circuit vacated the certification of a class of insureds who alleged the insurer violated insurance laws when its third-party vendor applied a downward-condition adjustment to total-loss actual-cash-value valuations based on the assumption that used vehicles are always in worse condition than when they are on a dealer’s lot. The Third Circuit found the named plaintiffs lacked standing to represent the insureds on this condition-adjustment claim because the insurer paid them additional settlement amounts exceeding the amount of their condition adjustment, which in turn offset any economic harm the plaintiffs could have suffered. The Third Circuit explained that the plaintiffs staked their claim on “an isolated intermediate step within [the insurer’s] valuation process, but they ultimately avoided any financial injury.” According to the Third Circuit, ignoring the insurer’s additional settlement amount “would impermissibly divorce [the plaintiffs’] standing to sue from any real-world financial injury.” P&C Class Actions Blake Simon Senior Associate Litigation & Trial Practice blake.simon@alston.com Melissa Quintana Senior Associate Litigation & Trial Practice melissa.quintana@alston.com 7 6 P&C Class Actions
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