Numerous class action suits have been filed against auto insurers regarding the valuation of vehicles that are total losses. These cases typically allege that insurers are undervaluing vehicles in some common way or in violation of a state regulation. The Ninth Circuit recently affirmed the denial of class certification in a published decision that I expect will be helpful to insurers defending these cases and others involving different lines of insurance but similar issues.

In Lara v. First National Insurance Company of America, No. 21-35126, — F.4th –, 2022 WL 414691 (9th Cir. Feb. 11, 2022), the plaintiffs sued Liberty Mutual companies and CCC Intelligent Solutions, a vendor that assists insurers in valuing vehicles, alleging breach of contract as to Liberty Mutual and an unfair trade practices claim against all defendants. The insurance policy required payment of the “actual cash value” of the vehicle, which was defined by a Washington regulation as “fair market value.” CCC researches the prices at which used vehicles sell at car dealers, and then makes adjustment based on the pre-loss condition of the insured vehicle and the difference between prices paid for vehicles purchased from private parties rather than dealerships. The insurance adjuster then in some cases adjusts the value shown on the CCC report. Plaintiffs claimed that the “condition adjustments” on the CCC reports violated a Washington regulation. The case survived a motion to dismiss, but the district court denied class certification under Rule 23(b)(3), based on lack of predominance of common issues and because a class action would not be a superior method of resolving the dispute.

In affirming, the Ninth Circuit concluded that whether the condition adjustment violated the regulation was a common question, but liability and injury would require individualized adjudication of each claim. The court explained that “[b]ecause Liberty owed each putative class member the actual cash value of his or her car, if a putative class member was given that amount or more, then he or she cannot win on the merits,” and determining that “would involve looking into the actual pre-accident value of the car and then comparing that with what each person was offered.” In other words, there would have to be a minitrial on the value of each vehicle.

As plaintiffs often do in these cases, the plaintiffs here argued that the value of the vehicles involved “damages issues,” and some courts have said that if the only individualized issues involve damages, that should not defeat class certification. But, as the Ninth Circuit explained here, “if there’s no injury, then the breach of contract and unfair trade practices claims must fail,” and “[t]hat’s not a damages issue; that’s a merits issue.” In other words, if the ultimate amount paid was sufficient, it doesn’t matter how you get there. As the court put it, “the district court was correct to apply ‘the old basketball phrase, ‘no harm, no foul.’” The court also agreed with the district court that the superiority requirement was not satisfied because individual trials would be preferable given the nature of the issues to be decided.

Insurers will want to cite this opinion in cases involving other lines of insurance as well, such as property. Property insurance class actions often involve disputes over actual cash value or replacement cost value, and the same principle should apply. Disputes over whether a few hundred dollars more were owed for damage from a hail storm, for example, are individualized. As in this case, those disputes may be best resolved by the appraisal process provided for in these policies, or in small claims court, and often fail to satisfy the requirements for a class action.

Photo of Wystan Ackerman Wystan Ackerman

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you…

I am a partner at the law firm of Robinson+Cole in Hartford, Connecticut, USA.  My contact information is on the contact page of my blog.  I really enjoy receiving questions, comments, suggestions and even criticism from readers.  So please e-mail me if you have something to say.  For those looking for my detailed law firm bio, click here.  If you want a more light-hearted and hopefully more interesting summary, read on:

People often ask about my unusual first name, Wystan.  It’s pronounced WISS-ten.  It’s not Winston.  There is no “n” in the middle.  It comes from my father’s favorite poet, W.H. (Wystan Hugh) Auden.  I’ve grown to like the fact that because my name is unusual people tend to remember it better, even if they don’t pronounce it right (and there is no need for anyone to use my last name because I’m always the only Wystan).

I grew up in Deep River, Connecticut, a small town on the west side of the Connecticut River in the south central part of the state.  I’ve always had strong interests in history, politics and baseball.  My heroes growing up were Abraham Lincoln and Wade Boggs (at that time the third baseman for the Boston Red Sox).  I think it was my early fascination with Lincoln that drove me to practice law.  I went to high school at The Williams School in New London, Connecticut, where I edited the school newspaper, played baseball, and was primarily responsible for the installation of a flag pole near the school entrance (it seemed like every other school had one but until my class raised the money and bought one at my urging, Williams had no flag pole).  As a high school senior, my interest in history and politics led me to score high enough on a test of those subjects to be chosen as one of Connecticut’s two delegates to the U.S. Senate Youth Program, which further solidified my interest in law and government.  One of my mentors at Williams was of the view that there were far too many lawyers and I should find something more useful to do, but if I really had to be a lawyer there was always room for one more.  I eventually decided to be that “one more.”  I went on to Bowdoin College, where I wrote for the Bowdoin Orient and majored in government, but took a lot of math classes because I found college math interesting and challenging.  I then went to Columbia Law School, where I was lucky enough to be selected as one of the minions who spent their time fastidiously cite-checking and Blue booking hundred-plus-page articles in the Columbia Law Review.  I also interned in the chambers of then-Judge Sonia Sotomayor when she was a relatively new judge on the Second Circuit, my only connection to someone who now has one-ninth of the last word on what constitutes the law of our land.  I graduated from Columbia in 2001, then worked at Skadden Arps in Boston before returning to Connecticut and joining Robinson+Cole, one of the largest Connecticut-based law firms.  At the end of 2008, I was elected a partner at Robinson+Cole.

I’ve worked on class actions since the start of my career.  Being in the insurance capital of Hartford, we have a national insurance litigation practice and most of the class actions I’ve defended have been brought against insurance companies. I’ve also handled some involving products liability, managed care, health care, utilities, financial services, higher education and environmental issues.

My insurance class action practice usually takes me outside of Connecticut.  I’ve had the pleasure of working on cases in various federal and state courts and collaborating with great lawyers across the country.  While class actions are an increasingly large part of my practice, I don’t do exclusively class action work.  The rest of my practice involves litigating insurance coverage cases, often at the appellate level.  That also frequently takes me outside of Connecticut.  A highlight of my career thus far was working on Standard Fire Ins. Co. v. Knowles, the U.S. Supreme Court’s first Class Action Fairness Act case.  I was Counsel of Record for Standard Fire on the cert petition, and had the pleasure of working with Ted Boutrous on the merits briefing and oral argument.

I started this blog because writing is one of my favorite things to do and I enjoy following developments in class action law, writing about them and engaging in discussion with others who have an in interest in this area.  It’s a welcome break from day-to-day practice, keeps me current, broadens my network and results in some new business.

When I’m not at work, you might find me running lines or watching a musical with my teenage daughter who hopes to be a Broadway star (or taking her to voice or dance lessons) or reading a good book.