Class actions; Predominance; FedRCivP 23(b)(3); Wal-Mart Stores, Inc v Dukes; Commonality; Actual cash value (ACV); Speerly v General Motors, LLC; Contract damages; Vehicle-specific valuation; Tarrify Props, LLC v Cuyahoga Cnty; The Rules Enabling Act

On petition for rehearing en banc, the court held that the district court abused its discretion by certifying a class challenging defendant-State Farm’s typical-negotiation adjustment because individualized valuation issues would predominate over common questions under Rule 23(b)(3). Plaintiff-Clippinger alleged that State Farm breached its Tennessee auto insurance policies by using a typical-negotiation adjustment that reduced comparable vehicles’ advertised prices when calculating ACV for total-loss vehicles. The district court certified a class, accepting plaintiff’s theory that damages could be calculated by refunding the amount of the adjustment. On en banc review, the court held that even assuming common questions existed, including whether the adjustment accurately reflected the used-car market, those questions would not predominate because State Farm promised to pay ACV, not to use any particular valuation formula. The court explained that the contract breach and damages elements would require comparing what State Farm paid each class member with the fair market value of that member’s vehicle, and “‘[d]etermining fair market value requires an independent and individualized assessment’” of each vehicle. The court noted that five other circuit courts have rejected “class certification in other actual-cash-value cases on these predominance grounds.” It further held that limiting State Farm to the Autosource Reports generated by a database would violate the Rules Enabling Act because it would eliminate State Farm’s “substantive right” to present vehicle-specific evidence that it paid fair market value despite using the adjustment. Because the class claims would “require ‘mini trials as to each’ class member[,]” individual questions predominated. Reversed and remanded.