En banc class-certification decisions are rare, which makes the Sixth Circuit’s decision in Clippinger v. State Farm Automobile Insurance Company, No. 24-5421, — F.4th —, 2026 WL 1113480 (6th Cir. Apr. 24, 2026) (en banc), especially notable. The case was one of a series of cases nationwide brought against various insurers involving automobile insurance claims for vehicles deemed to be a total loss. The issue was whether a plaintiff could obtain certification under Federal Rule Civil Procedure 23(b)(3) by challenging a “typical negotiation adjustment” (TNA)—a downward adjustment applied to advertised prices of comparable vehicles to account for expected negotiation—while otherwise accepting State Farm’s total-loss valuation methodology. The Sixth Circuit en banc said no, on a 10-7 vote. It overturned a prior three-judge panel opinion and brought itself into line with the Third, Fourth, Fifth, Seventh, and Ninth Circuits, all of which have rejected certification in similar negotiation-adjustment cases. Significantly, the majority discussed a couple of issues I’ve harped on in prior blog posts—that it is often useful for defendants to focus on how they would try the named plaintiff’s and other individual class members’ cases, and the potential significance of the Rules Enabling Act.
The Issue and Basic Facts
State Farm’s Tennessee policy promised to pay the “actual cash value” (ACV) of a totaled vehicle, with disagreements to be resolved by agreement or, if necessary, binding appraisal (a form of contractual alternative dispute resolution in which a three-member panel is empowered to reach a binding decision on vehicle valuation). State Farm used Audatex Autosource Reports that relied on pricing for comparable vehicles and, when using advertised prices, applied a TNA to estimate negotiated sale prices. Clippinger challenged only that adjustment, alleging that it artificially lowered ACV, even though she otherwise agreed to State Farm’s valuation.
On Clippinger’s own claim, State Farm initially paid $14,490 based on the Autosource Report, and Clippinger agreed to that amount but later sued. After she sued, State Farm invoked appraisal. State Farm’s chosen appraiser valued the vehicle at $14,432 and the other two appraisers ultimately fixed the value at $18,476, which was binding under the policy and resulted in an additional payment of more than $4,000, well above the disputed TNA. Nevertheless, Clippinger proceeded with the lower-value class claim based on the TNA, also asserting that she was forced to pay appraisal fees (which the policy provided for) and the district court allowed the case to continue and ultimately certified a class.
Why the Majority Reversed
The majority focused on the policy language, explaining that “the insurance policy shows that State Farm promised just one thing: to pay each class member the ‘actual cash value’ of the class member’s totaled vehicle.” Importantly, “no language in the policy prevented State Farm from using a typical-negotiation adjustment when calculating an amount to start the negotiations over the fair market value of the customer’s totaled car.” This meant the proposed common question did not actually resolve whether there was a breach of contract. As the court put it, “The question whether a breach occurred will instead depend on a different inquiry: comparing what State Farm paid a class member to the fair market value of the class member’s car.” And because fair market value turns on vehicle-specific facts such as “the year, make and model, mileage, options, and the overall condition of the vehicle,” individualized issues would predominate. The class claims would require “mini trials” for each class member and a jury could reach a result that would be based on other valuation evidence and have nothing to do with the TNA.
The Rules Enabling Act Problem
The district court tried to avoid those individualized inquiries by accepting a formula that would simply rerun each Autosource Report without the TNA. The majority held that this would violate the Rules Enabling Act, under which the Rules of Civil Procedure, including the class action rule, cannot alter substantive rights. Here, the majority held that the district court’s approach would strip State Farm of its right to defend itself with individualized valuation evidence and with the individual appraisal process the policy allowed. The majority explained that Rule 23 cannot be used to eliminate State Farm’s substantive right to present “unique evidence that it paid fair market value to a specific class member despite its use of the adjustment.” It also emphasized that the district court’s model would harm some absent class members, because some vehicles may have been undervalued by more than the TNA alone. Clippinger’s own case made the point: her TNA was only in the hundreds of dollars, but the binding appraisal came in about $4,000 higher than the original valuation.
Hicks
The majority distinguished Hicks v. State Farm Fire & Casualty Co., 965 F.3d 452 (6th Cir. 2020), although the rationale would have justified overruling that panel decision. There, the issue was actual cash value determinations under homeowners’ insurance policies. The Sixth Circuit had held that in determining actual cash value, labor costs could not be depreciated. In affirming class certification, the court held that Kentucky law treated an insurer’s overestimate “as an error in the insured’s favor” that the insurer could not later depart from in litigation. Here, by contrast, the majority concluded that “Clippinger may not rely on Tennessee law to avoid the need for individual inquiries in the way that Hicks relied on Kentucky law,” and “State Farm thus has the ‘substantive right’ to present individual evidence concerning the value of each class member’s car that it lacked in Hicks.”
Concurrence
Judge Bush’s concurrence went further and suggested that the case might well have been resolved based on the binding appraisal outcome for the named plaintiff alone. Judge Bush reasoned that the policy defines ACV as either the amount agreed by the parties or the amount fixed by appraisal, and Clippinger received both: “Whether viewed through the lens of estoppel or appraisal, Clippinger has received the ACV of her car. It also should end her individual lawsuit.” The majority did not disagree with this, it just chose to decide the appeal on the other grounds. Judge Bush also discussed how, in his view, class certification should be inappropriate when many class members lack Article III standing (although he did not believe that was the case here).
Dissent
The dissent concluded that the TNA issue was the central common liability question, and “Plaintiffs’ claims live and die on this common contention.” The dissent found Hicks applicable, and rejected the Rules Enabling Act concern, reasoning that State Farm could still present individualized valuation evidence in later damages proceedings, even if that required thousands of them. The dissent ignored that the individualized evidence on some claims would defeat liability, not just damages.
Takeaways
From a defense perspective, the key point is straightforward: a plaintiff cannot properly obtain certification simply by isolating one issue and asking the court to ignore the individualized inquiry that determines whether there was a breach of contract. And when certification depends on barring the defendant from presenting individualized valuation evidence or invoking contractual rights, the Rules Enabling Act should be front and center.